Supporting Disability: An Historical Perspective.
Civil War Pensions
The national system of income support for people with disabilities began in 1862 with a law that provided pensions to those injured or killed in the Civil War. Traditional in form and content, the law linked the level of payment to military rank and level of disability. In time, Congress expanded this basic program to include benefits for dependent widows, mothers and fathers. As sociologist Jill Quadagno (1988) has noted, an extensive infrastructure of pension and claim agents, pension attorneys and medical boards served this first large scale federal welfare system. In 1879 the program received a significant liberalization with the passage of the Arrears of Pension Act, which entitled a person to all of the payments he might have received had he filed a claim at the time he was injured. At this point applications flooded into the Pension Bureau, helped by a veterans organization called the Grand Army of the Republic that grew from 45,000 members in 1879 to 215,000 by 1885.
At a time when the two major political parties were evenly divided, pensions provided an important source of political largesse. The Republican Party, which contained a disproportionate number of eligible northern veterans (Confederate veterans, who tended to be Democrats, were not eligible), used the pensions to reward loyal voters. By 1889, with the Republicans in charge of the White House and the Congress, pensions amounted to nearly $100 million and consumed 27 percent of the federal budget. Indeed, the statistics were staggering: Veterans' pensions accounted for 21 percent of the federal budget in 1880, 34 percent in 1890 and 27 percent in 1900 (Keller, 1977). The Pension Act of 1890 made almost every northern Civil War veteran and his dependents eligible. What started as a disability program ended as a more general social welfare program for the elderly.
Administration of veterans pensions was anything but scientific. Policymakers made little effort to link payments to the degree of a person's disability or the level of his financial need. The south was the poorest region in the nation, yet few of its inhabitants received veterans pensions. Newly arrived immigrants, who had come after the Civil War, also derived little benefit from the program. Congress, for its part, paid little attention to the long-term financing of the program and made little effort to ensure that those who received pensions had, in a sense, earned them. Instead, Congress worked hard to expand a politically attractive benefit.
By the early 20th century, many people condemned veterans pensions, still a major item of federal expenditure, as a misguided form of social policy. At the same time that social scientists, civil service reformers and social workers derided Congress for the partisan way in which veterans' pensions were administered, they also turned their attention to another social problem related to disability. This time their criticism centered on the courts rather than the Congress and concerned the courts' handling of work accident cases.
There was, as it turned out, much to criticize. In the state of Washington, for example, injured workers who sued their employers for damages in 1910 and 1911 lost far more cases than they won, and the court spent half of its time on this sort of litigation (Tripp, 1976). The system resembled nothing so much as a giant lottery. Some workers won large damage awards from sympathetic juries, yet other equally needy and impaired workers had their cases thrown out by a judge on a point of law. Some of these legal points appeared to discriminate against workers, as in the notion that one assumed the risk of an accident by entering employment in a particular industry, such as coal mining, and hence should not receive compensation if an accident occurred. Even those who won their cases had grounds for complaint, as in the case of an immigrant worker from Duluth who injured his leg and received a settlement of $1,000 in the summer of 1910. Because of the appeals that were so characteristic of the legal process, the worker did not receive his payment until July 1912. Because he had to pay fees to his attorney, to an interpreter, to the court, to his doctors, and to expert witnesses, he ended up with $100 to show for his efforts (Asher, 1973). Workers complained bitterly about such a system, as did employers who objected to the large insurance premiums they were forced to pay against the risk of large jury awards.
In response to these criticisms, reformers, whom historians traditionally call progressives, developed workers' compensation programs. Under these programs all industrial injuries became the responsibility of the employer. In return for certain compensation, workers agreed to accept payments that were closer to the actual costs of medical care and foregone wages than were the large jury awards. Between 1911 and 1920, 45 states passed workers' compensation laws, heralding the arrival of a major new income support program for people with work-related disabilities (Berkowitz, 1987).
State officials hoped to take a scientific approach toward the administration of workers' compensation. In a particularly ambitious effort, California authorities decided to adopt and modify a schedule for compensation that had been prepared in 1904 by the Medical Council of the Russian Ministry of the Interior. Concluding that a ditch digger used all of physical functions equally, the California officials determined that a 39-year-old ditch digger would be standard against which others would be measured. Then, after establishing a job requirement classification system, the board produced an elaborate schedule that converted a person's age, wage and physical impairment into a compensation payment. The scheme was an effort to measure an injured person's potential wage loss by estimating the degree of his or her disability. Most states took a much simpler approach and simply equated a particular physical impairment, such as a loss of a toe or arm, with a particular level of compensation, often expressed as a percentage of the employee's previous wage for a particular number of weeks (Berkowitz, 1987).
The problem with this approach was that it failed to reflect the changing nature of disability. In the early days of industrialization, most accidents involved definite incidents that led to a particular form of trauma. If an employee accidentally put his hand into the teeth of a gear, he might lose that hand. Over time, however, the nature of workers' impairments and functional limitations changed. Heart disease, lower back pain and such occupational illnesses as asbestosis were the result of continuous exposure to hard and often dangerous work. More often than not, conditions outside of the workplace exacerbated a worker's condition. For that reason and because of the slow onset of many of these conditions, employers objected to paying compensation claims for these sorts of chronic illnesses. Their recalcitrance led to litigation and political disputes--the very things that workers' compensation was designed to avoid.
The Social Security Act
A subsequent generation of reformers, who came of age during the New Deal, thought they could improve on the impairment-related approach to disability characteristic of veterans' pensions and workers' compensation. They sought to design a program that equated income maintenance payments for disability with an inability to work, regardless of whether the disability arose inside or outside the course of employment. For state programs that inevitably contained inconsistencies from one state to another, these reformers hoped to substitute a federal program. It would be administered scientifically, in contrast to the partisan way in which veterans pensions had been administered, and it would be removed from the litigious atmosphere that, despite the best efforts of its creators, still surrounded workers compensation.
The Social Security Act of 1935 served as the legislative vehicle for the creation of a national disability income support law. This omnibus piece of legislation, certainly the most important social welfare law in the nation's history, marked the beginning of the nation's public assistance (welfare), unemployment compensation and old-age or Social Security programs. Disability figured only indirectly in the deliberations over the 1935 Act, yet each type of program eventually became important to the nation's disability policy.
In the case of public assistance, what might be called the serendipity factor came into play. President Roosevelt's advisors who prepared the legislation recommended that there be two categories of people who might qualify for welfare: the elderly and dependent children. During the Congressional deliberations, however, a group of blind people appeared who entered the hearing room with seeing eye dogs. The group made quite an impact on the Senators in attendance and, as a result, against the advice of the administration, aid to the blind became the third category of public assistance (Scotch & Berkowitz, 1990). That meant that the states could receive financial assistance from the Federal Government and offer welfare to indigent individuals who were blind. No other category of disability qualified. States who wished to aid deaf citizens, for example, would have to do so entirely from their own funds.
In the deliberations that preceded the passage of the Social Security Act, the topic of unemployment occupied the bulk of people's time and attention. The depression highlighted the problem, and it was natural for people to contemplate ways of cushioning the economic and personal shock. One method that had already been instituted in Wisconsin called for the state government to collect money from employers that could later be used to pay benefits to laid off employees. That approach, in essence, defined the unemployment compensation plan that Congress adopted. At the time, the big issues centered on such questions as whether the states or the Federal Government should administer unemployment or whether the money collected should be segregated by employer or pooled more broadly. Few people thought about the causes of unemployment. In this way, they failed to perceive that disability might be the vehicle that caused workers to become unemployed. As a result, unemployment compensation became a disability income support but received little attention from those interested in disability policy.
Of all the programs initiated in the 1935 Act, old age insurance, or Social Security as it came to be known, had the greatest long-term impact. In the 1935 version, old age insurance had little or nothing to do with disability except in an indirect manner. Although policymakers did not articulate the fact, they used old age as a surrogate for disability. Of all the reasons that someone might drop out of the labor force, they believed old age to be the most common. A desire to remove people from the labor force in a time of depression figured into their motives for creating old age insurance, but so, too, did the sense that elderly lacked the stamina to compete in an industrial economy. Considered in this manner, the elderly were, in a sense, disabled.
Toward Disability Insurance
After the passage of the 1935 Social Security Act, a push began to create a formal disability insurance program as part of the old age insurance program. In essence, the advocates of what became known as Social Security Disability Insurance (SSDI) wanted to lower the retirement age for people with disabilities. They believed that some workers, who had acquired a physical or mental impairment that left them unable to work, should be given a ticket out of the labor force in the form of a disability pension.
The campaign to create disability insurance ran into at least three distinct problems. One was the fact that Social Security was not a particularly popular program in the years between 1935 and 1950. Since it covered only about half of the labor force and paid lower benefits than did state public assistance programs, it failed to develop a political following that might push for its expansion. In 1940, for example, Social Security was just not a particularly significant program. In that year the nation spent six times as much on state workers' compensation payments as on federal Social Security payments; veterans programs cost 15 times as much as Social Security in 1940. As one Congressman from rural Texas put it, "The old and survivors' insurance means practically nothing to us" (quoted in Berkowitz, 1991).
The 1950 amendments to the Social Security Act remedied that problem. After receiving a report from an advisory council that recommended expansion of the program, Congress voted to raise the level of Social Security benefits and to expand Social Security coverage. The effect on the program was immediate. In February 1951, for the first time, more people received federal Social Security benefits than received state public assistance benefits for the elderly. As a direct result, the political popularity of Social Security increased, and members of Congress contemplated fundamental expansions of the program. In 1952 and again in 1954 they raised benefit levels and expanded Social Security coverage.
Even with the new popularity of Social Security, disability insurance remained a tough sell because of a second problem: the strong opposition of the insurance industry and the medical professions. The 1950 amendments did little to lessen this opposition and might have strengthened it. The insurance industry, which had lost a great deal of money on the disability insurance it sold during the 1920's, believed that disability was too elusive a concept for the Federal Government to control. In periods of recession, people would seek disability benefits as a means of coping with unemployment, and the increased costs would bankrupt the program. Insurance executives thought that effective administration required the discipline of the profit motive. As for the medical profession, organizations such as the American Medical Association (AMA) feared that disability insurance, in which physicians would be required to examine disability applicants, would become "the entering wedge," in the contemporary expression, for national health insurance, a measure to which the AMA was unequivocally opposed.
Insurance industry and the AMA opposition delayed but failed to derail the passage of Social Security Disability Insurance. In 1950, the measure passed the House of Representatives but, because of the political opposition, did not make it out of the Senate. In 1952, the AMA made a successful effort to block the implementation of a compromise measure that would have allowed the Federal Government to make disability determinations but not to pay benefits until the normal retirement age of 65. This compromise measure did pass in 1954, setting the stage for a climactic showdown over disability insurance in 1956.
By 1956, a third problem hindered the passage of Social Security Disability Insurance. It concerned a fundamental disagreement over where the priorities in disability policy should lie. One group, headed by Mary Switzer of the Office of Vocational Rehabilitation and prominent rehabilitation doctor Howard Rusk, with the tacit support of the insurance and medical industries, emphasized rehabilitation over income maintenance. They wanted to expand rehabilitation efforts to encourage labor force participation among people with disabilities rather than to make it easier for people with disabilities to retire. The other group, headed by prominent Social Security officials such as Arthur Altmeyer and Wilbur Cohen, with the active support of organized labor, regarded income maintenance as far more important than rehabilitation. They did not believe it was possible to rehabilitate many people with serious impairments and found little in the history of the vocational rehabilitation program to cause them to alter their opinion. Hence, they saw rehabilitation as another in the series of impediments that conservative opponents of disability insurance had put in their path.
SSDI in Practice
Each of the problems in the creation of disability insurance left its imprint on the history of income supports for people with disabilities. The lack of popularity of Social Security and the political opposition of the insurance and medical industries meant that a public assistance program for people with disabilities preceded passage of SSDI. In 1950, Congress, unable to agree on the desirability of expanding Social Security to cover disability, acceded to a compromise measure in the form of a public assistance category for people with disabilities. Called Aid to the Permanently and the Totally Disabled (APTD), the measure enabled state welfare programs to give money to needy people with disabilities, regardless of the type of disability. By December 1952, 41 states ran APTD programs and paid benefits to 221,600 people (Cohen, 1953).
Political opposition from rehabilitation advocates--businessmen such as insurance executives and professionals such as physicians--forced the SSDI proponents to compromise on some of their basic goals. The measure that passed in 1956 allowed state governments, acting under contract to the Social Security Administration, to make the initial determinations of disability, introducing an element of complexity into what was originally designed as a program to be administered by the Federal Government alone. The fact that physicians felt more comfortable working with the state vocational rehabilitation programs, with whom they had already developed close relationships, rather than with the Social Security Administration, helped to account for the change from federal to federal-state administration. So, too, did the fact that Congressmen believed that the system would further the goal of rehabilitating disability insurance beneficiaries. When states failed to reach that goal for reasons that I have described elsewhere (1987), the administrative structure of SSDI survived as an anomaly that only made sense in its original historical context.
Other concessions were also built into the 1956 measure. Fears raised by insurance executives that SSDI would be too costly to sustain motivated Congress to limit SSDI benefits to people over 50 years of age and to exclude benefits for the dependents of disabled workers as part of the package. Even with these compromises, passage of SSDI proved a near thing. A change in one or two votes would have defeated the measure.
Once Congress had put SSDI in place, it proceeded to liberalize it until, by 1972, disability benefits came to resemble other Social Security benefits. Key changes included the introduction of dependents benefits in 1958, the elimination of the age 50 requirement in 1960 and the initiation of cost-of-living adjustments and the provision of Medicare coverage for disability beneficiaries in 1972. Liberalization reflected the preferences of members of Congress, particularly those from depressed areas of the country. In the late 1950's, for example, Representative Carl Perkins (D-Kentucky) complained about "the thousands and thousands" of applications for SSDI that had not been approved and urged that the program be expanded (Congressional Record, July 31, 1958, p. 15737).
As the program expanded from a simple lowering of the retirement age from 65 to 50 for disabled workers to the nation's most important form of disability income support, it experienced a substantial growth in the rolls, accompanied by great volatility. The number of workers who received SSDI doubled between 1960 and 1965 and again between 1965 and 1973. In the years between 1971 and 1974, the annual rate of growth in the number of workers on SSDI never fell below 10 percent. In 1978, the number of workers on SSDI reached 2,880,000. Then the number began to fall to a low of 2,569,000 workers in 1983, but after that year the rolls rose once again, reaching a new high in 1989 and continuing to expand into this decade (Berkowitz & Burkhauser, 1996). By the 1970's, Congress no longer called for the expansion of the program. Instead the number of people on the rolls and the rate of expansion had become the issue. When, however, Congress attempted to redress the problem in 1980 and the Reagan administration launched a major effort to remove people from the rolls in 1981, Congress, complaining that these actions were too harsh, permitted a loosening of the program that led to the current expansion. As those in the insurance industry had predicted, disability was indeed a hard risk to control.
Supplemental Security Income
In 1972, the nation added one final element to its arsenal of income support programs for people with disabilities. The creation of Supplemental Security Income (SSI) reflected the Nixon administration's desire to improve the welfare system by proposing a federally administered measure that would reward, rather than penalize, work (Derthick, 1990). First introduced in 1969, the President's Family Assistance Program sought the elimination of the welfare programs created in 1935 and 1950 and their replacement with a guaranteed income for all of the nation's citizens. This ambitious plan ran into opposition from conservatives, who feared that the nation's labor supply would be reduced and that the plan would be prohibitively costly, and from liberals, who thought the plan did not include generous enough income guarantees. What survived from the long debate was a new program for those in the "adult" welfare categories. Under the terms of the legislation, the Federal Government assumed responsibility for the administration of the aid to the aged, blind and permanently and totally disabled programs. Passed late in 1972, the program went into effect in 1974.
Mistaken assumptions about historical continuities governed the development of SSI. In the history of welfare, the aged had always outnumbered the blind; and after 1950 they outnumbered the permanently and totally disabled as well. In 1974, more than 60 percent of the SSI caseload consisted of aged recipients. With improvements in Social Security, in particular the beginning of cost-of-living adjustments in 1975, the number of aged people on the SSI rolls fell and, with the surge in disability rates in the second half of the seventies, the number of people with disabilities on the SSI rolls rose. By 1985, the number of blind and disabled people (adults and children) on the SSI rolls exceeded the number of elderly people; by 1994, people with disabilities outnumbered the elderly on the SSI rolls by a factor close to two (Berkowitz & Burkhauser, 1996). Considered by Congress as a supplement to Social Security for individuals over 65, the SSI program emerged instead as a disability program.
If SSI were to be a disability program, it mattered greatly how the program handled such matters as disability determination. Here again the forces of historical continuity triumphed. Rather than invent a new administrative structure for SSI, Congress simply applied the existing system for SSDI to SSI. That meant that states, acting under contract to the Federal Government, decided who should enter the SSI roles, even though the arrangement reflected the politics of the 1950's, not the social realties of the 1970's. That meant also that SSI inherited a stringent definition of disability from SSDI, one that emphasized the inability to engage in substantial gainful activity rather than the potential for rehabilitation and one invented for adults rather than for children. In point of fact, however, children compromised more than 10 percent of the SSI caseload beginning in 1992 (Berkowitz & Burkhauser, 1996).
By the end of the 20th century, Americans no longer treated disability at home. Instead, they relied upon an income maintenance system, run primarily by the federal and state governments. By 1970, income transfers constituted 62.8 percent of all disability-related expenditures, and SSDI alone cost $18.8 billion in 1982 (Berkowitz, 1985). The system amounted almost to a historical catalogue of programs. Although pensions for Civil War veterans faded from the scene with the deaths of those who fought in the Civil War and of their dependents (even though at least one Civil War widow survives), workers compensation from the progressive era, SSDI from the New Deal and the Eisenhower era and SSI from the 1970's survived to form the core of the nation's disability income system.
This century has also included spectacular developments in the field of rehabilitation. Where 19th century Americans regarded many forms of disabilities as lifetime conditions that limited the labor force participation of people with disabilities, 20th century Americans came to believe in the possibilities of rehabilitation. Technology and modifications in the physical environment lessened the limitations imposed by physical and mental impairments.
Despite earnest efforts on the part of current policymakers, we have failed to join the revolution in disability income supports with the promise of rehabilitation. Indeed, the income support programs contain features that produce rehabilitation disincentives. The workers compensation program, for example, continues to award benefits on the basis of impairment alone rather than on the condition of disability. It involves lengthy proceedings that defeat the objective of rehabilitation. The program, in other words, continues to exhibit the characteristics of the court-oriented system from which it arose. SSDI, for its part, makes the receipt of disability benefits an all-or-nothing proposition. To receive the benefits, one needs to retire. This program, then, reflects its origins as part of Social Security, with the accompanying depression-era emphasis on orderly withdrawal from the labor force. The features of the SSDI program, in turn, have been carried over into the SSI program, guaranteeing that rehabilitation disincentives affect that program as well.
The problems in the nation's approach to disability resist easy solution. It might nonetheless be helpful for us to view our disability programs as the products of historical circumstance. In that way, we may overcome some of the historical myopia that afflicts the policy process and begin to understand how yesterday's solutions have become today's problems.
1. Asher, R. (1973, Winter). Radicalism and reform: State insurance of Workmen's Compensation in Minnesota, 1910-1933. Labor History, 14, 34-35.
2. Berkowitz, E.D. (1987). Disabled Policy: America's Programs for the Handicapped. New York: Cambridge University Press.
3. Berkowitz, E.D. (1991). America's Welfare State. Baltimore: Johns Hopkins University Press.
4. Berkowitz, E.D., & Burkhauser, R. (1996). A United States perspective on disability programs.
5. L. Aarts, R. Burkhauser & P.R. DeJong (Eds.). Curing the Dutch Disease: An International Perspective on Disability Policy Reform. Hants, England: Avebury Press, 71-92.
6. Berkowitz, M. (1985). Disability Expenditures, 1970-1982. New Brunswick, NJ: Rutgers Bureau of Economic Research.
7. Cohen, W.J. (1953). Facts and figures on vocational rehabilitation, 1953. Located in Record Group 290, Accession 62A-190, Washington National Records Center, Suitland, MD, and Congressional Record (1958).
8. Derthick, M. (1990). Agency Under Stress: The Social Security Administration in American Government. Washington, DC: Brookings Institution.
9. Keller, M. (1977). Affairs of State: Public Life in Nineteenth Century America. Cambridge, MA: Harvard University Press.
10. Quadagno, J. (1988). The Transformation of Old Age Security: Class and Politics in the American Welfare State. Chicago: University of Chicago Press.
11. Scotch, R,. & Berkowitz, E. (1990). One comprehensive system? An historical perspective on federal disability policy. Journal of Disability Policy Studies. 1 (3), 1-19.
12. Tripp, J. (1976, Fall). An instance of labor and business cooperation: Workmen's compensation in Washington State (1911). Labor History, 17, 537.
Dr. Berkowitz is professor of history at George Washington University. The author of Disabled Policy (1987), he has published widely on the history of social policy including, most recently, To Heal a Nation: A History of the Institute of Medicine (1998).
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|Author:||Berkowitz, Edward D.|
|Date:||Mar 22, 1999|
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