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Congress needs to revitalize the Supplemental Security Income program for the elderly

Congress needs to revitalize the Supplemental Security Income program for the elderly
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Many people think the Social Security Act passed during the Great Depression was only about creating the Social Security program. The Act, however, brought into existence the entire structure of the country’s current income support system including Social Security, unemployment insurance, TANF (called Aid to Dependent Children at the time), and the Supplemental Security Income program (called Old-Age Assistance at the time). This last program, SSI, has been of historic importance in addressing hardship among the elderly, but currently suffers from administrative and policy neglect.

Although the policy debate has long been settled, there was a vigorous debate in years past about whether the government’s role in providing income support to the elderly should be mainly through a social insurance program (taxes and benefits are based on a person’s earnings) or through a means-tested program. The social insurance argument prevailed, and today Social Security pays out more than $1 trillion in benefits each year. Interestingly, though, as late as the 1950s, the means-tested Old-Age Assistance programs (the forerunner to SSI) were actually larger than the Social Security program.

Negotiations between the Nixon administration and Congress led to legislation that created the current SSI program and made it a consistent “supplemental” source of income to low-income elderly persons (and disabled persons). The federally supported (but state run) Old-Age Assistance programs were converted to a federal structure in 1972, and the Social Security Administration (SSA) was charged with operating the program. Today, an elderly individual, with limited assets, is eligible for $783 per month in SSI. That amount is generally reduced if the person has other income. So, for example, an elderly person whose only income is a $500 Social Security check could receive about $300 from SSI. Currently, 2.3 million persons 65 or older receive SSI.

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The $783 payment amount is actually below the official poverty threshold for an elderly individual in the United States ($1,022 per month). The effects of the low payment amount can be seen in household surveys. For example, my tabulations from the government’s SIPP survey indicate 34 percent of elderly persons on SSI report they cannot make their housing or utility payments or have difficulty affording food. Thus, many individuals on the program, in effect, are telling policymakers the benefit level is not sufficient to prevent material hardship.

The program also suffers from administrative problems that, in the COVID-19 environment, are going to accelerate quickly. The elderly often learn about their eligibility for SSI when they are in a field office talking to an SSA employee, but those offices are now closed. Compounding the problem is that SSA’s IT platform does not allow online applications for elderly SSI benefits as it does for other benefits, including SSI disability.

Data on the number of elderly persons awarded SSI benefits each month reveal the effect of administrative problems in the pandemic environment. Awards to the 65 or older population have fallen off a cliff in the last three months (from 9,147 awards in March to 4,607 in June).

The figure for June is the lowest number of SSI awards for the elderly for any month in the last 20 years.

If this trend is allowed to continue, it will decimate an important program for seniors.

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Interestingly, data on SSI awards can also illustrate the effects of good administrative practice. In the fall of 2017, SSI awards for the elderly increased sharply. The reason? The Trump administration launched the SSI Elderly Notice Pilot. The pilot tested whether notices mailed to low-benefit Social Security recipients about SSI would increase awareness of SSI.

One simple solution to the current decline in SSI awards is for SSA to implement the pilot at full scale. The pilot sent notices to a 10 percent sample; to scale up, SSA could send notices to another 10 percent sample each month — and after 9 months all elderly persons on Social Security will have been notified of potential eligibility for SSI. Such an approach is elegant in that it is evidenced-based outreach, easily managed by SSA on an incremental basis, and would be comprehensive in its reach. The administration has the authority to implement the pilot at full scale, or Congress can require it of the agency.

More generally, the pilot is noteworthy because it experimented with a program that has become sclerotic in many ways. SSI’s rules are highly complex, and many features of the program have fixed dollar amounts that are the same or similar to the amounts that existed during the Nixon administration.

The SSI program has a storied history in the United States, and — at one time — old-age assistance was the largest income support program for the elderly. Some attention from Congress, in terms of better oversight of administrative practice and interest in testing policy innovations, would go a long way towards revitalizing the SSI program for the modern era.

David A. Weaver, Ph.D., is an economist and retired federal employee who has authored a number of studies on the Social Security program. The views in this article do not reflect the views of any federal agency.