Our Ruling Classes Have Everything Under Control

A reader writes:

Thought this might be of interest to you.  It’s a pretty good demonstration of how even when the government does “care” for the poor, it does so in the worst, most expensive, and degrading way.  It sweeps them under the carpet and gives huge incentives against them improving their lives, while at the same time creating a huge burden on the normal workers.

Here is the long FB post I made:

I was listening to This American Life while cycling to school this morning and they had a fascinating episode playing. It’s long form 6 month investigation into America’s Social Security Disability system, and the its incredible increase in the past 20 years.

This is well done journalism at it’s best, definitely worth a listen or a read. The audio podcast is here: http://www.thisamericanlife.org/radio-archives/episode/490/trends-with-benefits
And the long form written article is here: http://apps.npr.org/unfit-for-work/

Summary with statistics:

The number of Americans on disability has doubled in the past twenty years, up to now 14 million. This costs about $124,000,000,000 per year.

In large part this has happened because people have been moving from welfare to disability. Not only does disability have no end date, but the states also have a very strong interest in this, because disability is entirely federally funded.  There are firms hired by states to comb welfare lists and move people from there onto disability, they’re paid about $2300 per person moved. Also people on disability are hidden from all employment figures.

There is no legal definition of disability, now is there a representative on behalf of the government at disability hearings.
Less than 1% of people ever move off of disability It provides no job training or rehabilitation, and is not meant to help people recover or get back on their feet. They become dependent on the government for the rest of their lives, and are at the same time condemned to poverty. And free healthcare.

There have sprung up a huge crop of lawyers and law firms whose sole job is to get people onto disability. For this they are paid 25% of the SS disability backpayments when their clients wins, in a check directly from the government.

Finally, the number of kids on disability has skyrocketed in the past 20 years. In an excellent conclusion to the article, Chana Joffe-Walt writes:

“I haven’t taken a survey or anything, but I’m guessing a large majority of Americans would be in favor of some form of government support for disabled children living in poverty. We would have a hard time agreeing on exactly how we want to offer support, but I think there are some basic things we’d all agree on.

Kids should be encouraged to go to school. Kids should want to do well in school. Parents should want their kids to do well in school. Kids should be confident their parents can provide for them regardless of how they do in school. Kids should become more and more independent as they grow older and hopefully be able to support themselves at around age 18.

The disability program stands in opposition to every one of these aims.”

I suspect this is the beginning of a journalism trend, as when I got to school Liz linked me a related article by The Atlantic: http://www.theatlantic.com/business/archive/2013/03/disability-insurance-americas-124-billion-secret-welfare-program/274302/

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  • http://stmonicasbridge.wordpress.com Kristen

    Most interesting because although my children qualify for Medicaid from a financial standpoint, my daughter with severe classic autism (cannot speak, cannot bathe herself, cannot do anything perceived as “normal for her age) is denied SSI (disability for minors) on the same basis of our income. SSI would automatically qualify her for Medicaid. And our state is deeply in the red, would they not consider moving a truly disabled child to the disability roles since it is federally funded??

    Just mind-boggling how many truly disabled people are denied legit claims while those with zero disability are getting checks every.single. month.

  • Dan C

    I work in medicine in a ghetto. 75% of the parents of my children work. 5% have private insurance. All my patients are born with expensive chronic illnesses requiring $1500-3000/month of care to survive well. (A failure of surviving well is a development of illness, infection, and loss of function of various organs over time resulting in a very very premature death.)

    100% of my patients at age 18 work nearly full time, or work several part-time jobs. Some go to college doing the same. Of those without private insurance, each one will lose their insurance at age 18 and none will ever get a job that provides private insurance. That is the fact of life for many workers who do not go to college. The system for provision of insurance relies on the employers to provide such insurance as part of the health care benefits package. My patients rarely get such jobs. (It is much like their parents.)

    I encourage as soon as possible to apply and appeal the government for disability/SSI benefits. If a one of the children I care for makes 18, does not have private insurance (the vast majority of my patients), then, as I have seen it, they will get sick and can have life-threatening infections. Luckily, the ER’s and hospitals are obligated to hospitalize such folks (and mine does it with ease and eagerness) but home nursing companies and pharmacies and phamraceuticak companies are not obligated to prevent these hospitalizations and their resulting disability. So, a working young man, working two jobs, who has, with his mother and doctor, retained health due to compulsion, responsibility, and diligence on the parts of all involved in his care for 18 years, has all this thrown out the window because of no availablity of complicated system of support that obligates health care producers and providers for non-emergency care.

    Once on the disability, these patients are encouraged to retain the medical aspect, and turn back the monetary support which I find many do in order to keep their jobs.

    So…we have a complex problem. Children survive well into adulthood with difficult medical problems. Once, in an economy in which the man bagging groveries at the grocery store (such a job once existed, yes) could feed his family (again-yes, such jobs existed routinely) and have benefits for them, now is likely partially and infrequently employed, requires the mother of his children to be similarly partially and occasionally employed, all at tasks which lack benefits. The chronically ill child’s health is dependent on public assistance. At age 18, currently, no public support is available for this individual who will, due to good and compulsive family care, be well and healthy and productive, only to have all this health washed away due to lack of medical resources such as medicine or expensive infusions.

    It seems to me a complicated economic change, in which working class and now middle class folks are losing secure employment routinely, due to globalization largely, coupled with expensive and effective medical care of chronic medical problems once debilitating and fatal has had an attempt to

    The vast vast majority of people work or want to work. Few rare people due not desire to seek employment. Jobs with private insurance are unusual for individuals. Jobs that can support private purchase of insurance are unusual. Yet individuals have chronic medical problems that are expensive, and need care continuously.

    Thus is born the necessity of disability insurance for the well individual with chronic medical problems.

    • Jon W

      But I have a cheap iPod, so this incredibly unjust restructuring of the economy was totally worth it.

      • http://chicagoboyz.net TMLutas

        You have a distorted and false view that the current system of medicine is free market. It is not. The payment tables are created by government committee with strong input from insider lobbyists. We have the wrong doctor mix because of them which reduces health outcomes. We incent *against* price shopping. We incentivize for prepaid medical care and against insurance, confusing people by calling the former, the latter. We incent unnecessary testing as insurance against being sued.

        In short, it’s a mess and largely a creation of bad government policy that is over-intrusive.

        • http://twitter.com/MrsKrishan Clare Krishan

          And as an immigrant taxpayer from ye Olde-Worlde of nationalized health-care (the favored bete noir of new-world chattering classes) I resent paying double for half as much (that’s a factor four for those who have a hard time with arithmetic, read up on Ernst Von Weizsäcker and the Club of Rome’s better, more libertarian — !shock horror! — way here:
          http://books.google.com/books/about/Faktor_vier.html?id=qIC9cQAACAAJ (original German)
          http://books.google.com/books?id=HeMRBn-N7lEC&printsec=frontcover&dq=factor+four&hl=en&sa=X&ei=VnRkUZCLCcaB0QHss4CADQ&ved=0CDEQ6AEwAA (English)

          • http://chicagoboyz.net TMLutas

            You seem to mistake me for someone who defends the current system. I resent paying more for less too and recognize that this is what’s going on because unlike most of american life people don’t price shop and institutions regularly overcharge when they do not lose custom if they charge more.

            The Club of Rome is regularly pilloried in libertarian circles so please stop associating the two. Both sides are horrified by it.

        • http://twitter.com/MrsKrishan Clare Krishan

          oops too URL heavy = pls moderator may my comment see the light of day?

        • Dan C

          So…health care expenses are heavy at two times of a life- in the beginning, and that is largely due to neonatal intensive care and the management of children with medical problems. And at the end of life. In the middle, and there is a vast middle, expenses are modest. Very modest. “Over-testing” which has been the favorite bugbear of the right and the left in terms of medical care is unusual and usually inexpensive. Care for our sick elderly and care for our sick children is where the expenses are.

          • http://chicagoboyz.net TMLutas

            Count the number of useless procedures in your average US hospital that go far beyond ordinary care in the elderly. It’s disgusting, hearing about useless procedures that do not improve quality of life but satisfy someone who signed off on the paperwork.

            Name a condition, any condition for which there are multiple treatments. The older treatments are generally less expensive and should be tried first. If they work, great, if not, move on to the more expensive stuff. But in the US the tendency in all too many cases of chronic lifetime illness is to try the 85% of cases effective drug on patent for $500 a month instead of the 75% of cases effective drug off patent for $45 per month. That’s not cheap. You’re essentially condemning 75% of the population you treat with an extra expense of $455 per month for the rest of their lives so that 10% of the population don’t have to wait a month for relief because they happen to not respond well to the older drug. That’s idiotic, but common.

            The fact is that too many people don’t go for a $500 MRI at a stand alone imaging center but just automatically shuffle off to the hospital where the same MRI costs $3000. And if you have a 20% copay, which many people do, they’d have paid less to go to the independent center and pay cash.

            This is nothing about care for the weak or the defenseless. It is all about abominable waste that cripples our ability to care for the truly needy. It sickens me that the idiots who end up hurting the poor take the position that they have the moral high ground as well.

    • Dan C

      And there was a sentence that ran away from my editing…so sorry.

  • Renata

    This saddens me too. My state is especially egregious. I worked in a state university where there was a large number of students who shared their stories about how they got on disability by claiming they were “suicidal” following a divorce or whatever (this was followed by peals of laughter); professors taught people hw to get their family members on; and everyone knows people who are scamming the system (the town sports coaches who work out at the gym, etc). Yet a dear, dear friend of mine, who is only alive because of pills she can barely afford, who has been in and out of hospitals, has only one kidney, heart trouble, severe back trouble, and can only work by popping pain killers, has been denied.
    This is very troublesome for people like me who deeply believe in charity for the needy, charity that blesses the giver as much as the recipient. I don’t have an answer for our idiotic state bureaucracy that allows, nay , ENCOURAGES the able-bodied to milk the system.

  • Renata

    I did not see Dan C’s post before I posted. My disgust with healthy students, and with able-bodied suburbanites on disability, does not, as I said, extend to the truly suffering without other recourse., such as the children you treat. But there has to be a better answer.

  • Elizabeth

    Just listened to this show last night. I was really impressed with This American Life for following the truth wherever it led. It seemed like the main thrust of the reporting was not that there are a bunch of freeloaders on the system, but that as our economy has hemorrhaged working-class jobs overseas, we have basically shunted all these undesirable middle-aged workers into the disability program to keep their numbers out of the welfare rolls and the unemployment statistics–hiding another measurement of just how horrible and unsustainable our economy is. Scary stuff.

    • http://twitter.com/MrsKrishan Clare Krishan

      Exactly – welcome to secret-socialism (USA-style)

  • Will J

    Despite what the article says, there is a definition of disability. It is based on health problems, age, and education. The Social Security Administration is required to periodically review disability cases. I cannot tell you how often or well they do this. States want to have long-term disabled on SSI or Social Security because it saves them money.

  • http://irenist.blogspot.com/ Irenist

    One of the reasons I would prefer a universal basic income guarantee and universal health insurance to the current welfare regime is that I have known far too many people personally who have been afraid to take a job or to get married for fear of losing disability benefits or Medicaid. Restricting these programs to the “deserving poor” has the unintended consequence of incentivizing people to malinger and stay unmarried in order to look “deserving” on some form.

  • Dan C

    As Elizabeth says, and Jon W pithily alludes to, this is a consequence of economic re-structuring.

    There is a line of historical analysis that indicates that it was the New Deal that actually saved the upper classes. The rise of displaced workers, of mobile, disenfranchised young and middle-aged men without employment as well as a well-documented far left series of movements (IWW, Communist Party, etc) that were public and appreciated in places like New York’s Union Square (a section of NYC in which no one who lives there now will be caught supporting a union) put serious political change to the economic left truly on the table (unlike the poseur claims of rising socialism by the Tea Party now). Putting people to work in the Depression prevented revolution. Such is one line of thinking.

    Truth is, people work. People want to work. The myth is that people do not want to work. I spend half my day and 75% of my waking hours in a place that no politician above city council will ever seek votes. And the people I am with, who work with me and who are my most of my patients, want to work. (Those who do not want to work or cannot work have many other barriers in terms of mental health that prevent this employment.)

    Work and access to resources to be productive is increasingly limited in the US for folks without higher education secondary to globalization. Increasingly, a college education is less of a protection to chronic underemployment.

    Globalization advocates will rightly point out that outsourcing labor has increased wealth outside the US, and some clever arguments are often made accusing anti-globalization comments as promoting hunger in Africa. Or some such nonsense. Because, in the views of the Faith of Free Markets, one cannot have justice and dignity in the US and in other countries simultaneously, because these are scarce resources, needing a market to efficiently determine the winners and losers in the justice and dignity lottery.

    • http://chicagoboyz.net TMLutas

      If you take a trip down to your local chamber of commerce they can give you chapter and verse of a long list of laws that reduce the number of people they can afford to hire as well as laws that reduce new company formation where you live. Absent these laws, unemployment is lower and wages are bid up. I am against such laws and they proliferate like a plague in the US and in most of the 1st world. It is this, not the free market, which is hurting the inner city people you are rightly concerned about.

      • http://twitter.com/MrsKrishan Clare Krishan

        Ssh – that’s libertarian Austrian school economics you’re talking there, the elites don’t want you to know about our European classical liberal patrimony of Catholic Carl Menger et al lest you get uppity and empower yourself the nueva encomienda is so much more conducive to the new imperialists.

      • Dan C

        1) What makes you think I do not have a relationship with business folks? I know many who eagerly embrace regulation as a way to level the playing field for the virtuous and ethical from the dirty. It assures them of safe products in their use and that for those who do make things, that they work to create safe things, as well as their competitors. I know landlords that gladly embrace the rules to renting.

        The presumption that all business folks are libertarian is ridiculous. In competition, everyone needs fairness not bullies. Most business people actually do not fear regulation.

        2) Jobs lost in dramatic ways in which we have lost them in this country since the 1960′s have nothing to do with regulation. These jobs were lost due to a change in how we view labor and wealth. To gain more wealth, labor had to be devalued. Jobs were shipped overseas, wealth for the wealthy expanded tremendously. The regulation/taxes/etc complaints are a distraction. Jobs were sacrificed for higher profits. Benefits, part of the core aspects of this, were sacrificed with the jobs.

        • http://chicagoboyz.net TMLutas

          Hah! Government regulation is mostly about advantaging the insiders to protect themselves from upstart competition. But the local chamber and the NFIB are generally on the side of the angels in my experience. Maybe it’s not the same in your neck of the woods.

          The truth is that when China moved to Dengism in the 1970s it moved hundreds of millions out of economic serfdom and into the international labor market where their material situation has consistently improved. The economic liberalization that freed so many people was bound to have a depressing effect on labor wage rates. With India joining the party as it ended the permit raj, hundreds of millions of more people in that country added themselves to the number of competitors.

          Neither of these two great economic liberalizations are bad. We should be happy for our Indian and Chinese brothers and sisters. But the wave of competition was not easy to bear for us and the China component only crested in the last few years. We are already starting to see an onshoring movement and that should be picking up steam and becoming really visible by 2015. The worst is ending and if we improve our competitiveness, we will see jobs coming back to the US.

  • dpt

    The entire system is open for scamming.
    Have a neighbor from Asia who came to the US so their child can attend school in the US. Said neighbor received a family related visa as her brother is a US resident. Our neighbor is a “single parent” now and receives aid for rent, school lunch, etc., yet has a husband (an employed professional) and home back in Asia.

    The truly poor and needed are going to be in a world of hurt when the system collapses. Yet for political reasons, etc. the above type of abuses are allowed to go on.

    • Dan C

      So so rare. These anecdotes are just that-little stories we tell ourselves to fuel rage. Systematic assessments do not demonstrate this. Most people are average. Average in good and bad. Not many really get the ambition to super-scam. That is a fiction.

      I know scammers and they are few and far between.

      • dan

        We need to be careful writing this off as “rare” as there is a known methodology to take advantage of system. I live in an immigrant household and in an immigrant neighborhood, and we know and see the system being taken advantage of.

        In the end, the truly needy will pay the price as the entitlement system is abused and taken advantage of.

  • Mark R

    Dear Austrian School Critics:

    F. von Hayek actually lamented that the United States had no socialized medicine nor any kind of real pension program for retirees. He eventually left and returned to Europe. Most American conservative politicos he dealt with were useless.

  • Elaine S.

    Stories like this are a big part of the reason that I can’t make up my mind whether or not to apply for SSI for my daughter; she’s considered mildly to moderately autistic — she can read, write and talk (albeit well below her age level), bathe and dress herself, do routine tasks/jobs with some direction, etc.
    My husband and I were both raised to not accept “handouts” and not be “freeloaders” and unless we are absolutely sure we qualify for some benefit, we will not apply for it. We worry that putting our daughter on SSI will, in addition to being a huge hassle of denials and appeals, in essence make her a — for lack of a better term — just another “white trash” welfare queen for the rest of her life, when she might learn to be independent and support herself, at least minimally, if we just try hard enough. I’ve also read some horror stories about men courting and even marrying mentally handicapped women just so they can live off of their SSI, and I don’t want that happening to her after we are gone and can’t steer her away from someone like that. But on the other hand, she is going to need something to fall back on after we are gone — she has no siblings or cousins who can take care of her. I have prayed about this a lot but still don’t know what to do.

    • http://chicagoboyz.net TMLutas

      If you get an economic opportunity after your daughter is on SSI that would eliminate the SSI, would you pass on the opportunity? That’s the sort of soul crushing trap too many of these programs generate. If you are willing to see the bigger picture and take a high marginal tax rate at the start of the road to a better life (it can be up to 80%), then by all means take the help. You have a good head on your shoulders and can escape the trap.