(CNSNews.com) - In the past four decades, the number of people receiving benefits from the Social Security Disability Insurance (DI) program has increased nearly sixfold, rising from 1.5 million in 1970 to 8.8 million in 2012, the Congressional Budget Office says.
On Thursday, Joyce Manchester, a chief analyst with the Congressional budget Office, told a House subcommittee that the number of people seeking DI benefits is expected to continue rising, and she said the Affordable Care Act "is likely to influence application rates" although it's "difficult to predict" what the impact will be.
"Looking ahead, the Affordable Care Act is likely to influence application rates for the DI program, but whether it will result in more or fewer beneficiaries is difficult to predict," Manchester told the House Ways and Means Subcommittee on Social Security.
She explained that people getting disability benefits receive health coverage under Medicare, regardless of their age, but only after a 24-month waiting period.
Applications for disability insurance could increase under Obamacare, as people gain immediate access to subsidized health insurance through state exchanges, with no exclusions for pre-existing conditions. In that case, they could easily leave their employer-provided insurance and wait two years for Medicare benefits to kick in under the disability program.
"Those considerations will tend to increase applications to the DI program," Manchester said.
But on the other hand, Obamacare, with its insurance subsidies and expansion of Medicaid, will make it easier for many people with health problems to buy their own insurance. They wouldn't need the Medicare coverage that eventually is provided under the DI program. "That change will tend to reduce applications to the DI program," Manchester said.
Once they have been awarded benefits, only a very small percentage of DI participants permanently leave the program to return to the workforce, Manchester said in her statement to the committee.
The decision to apply for disability insurance benefits is strongly affected by how easy it is to qualify for benefits; the state of the job market; and how generous the disability benefits are compared with one's salary. "Access to health insurance and the cost of obtaining it are additional factors that can affect an individual's decision to apply for DI benefits," Manchester added.
"When jobs are plentiful, some people who could qualify for the DI program may choose instead to work. Conversely, when jobs are scarce, such as in economic downturns, some people with disabilities may find that their employment opportunities are especially limited, and they will instead choose to apply for DI benefits. Indeed, in the aftermath of the recent severe recession, applications for DI benefits reached a historic high, exceeding 2.9 million in calendar year 2010."
DI benefits are paid from the Disability Insurance Trust Fund, which is financed primarily by the Social Security payroll tax.
Manchester said the DI program's rapid expansion and the projected gap between its spending and dedicated revenues in the future raise questions about the financial sustainability of the program.
Since 2009, the program has been paying out more in annual benefits than it receives in taxes and in interest on the balances in its trust fund. CBO projects that the DI trust fund will be exhausted in 2016, nearly 20 years before the projected exhaustion of the trust fund for the Social Security retirement program.
Total DI expenditures were $135 billion in 2012 and CBO projects those expenditures will rise to $213 billion in 2023 when the number of beneficiaries will grow to 12.3 million.
Thursday's hearing focused on various ways to fix the DI program.