Eliminate Supplemental Security Income Benefits for Disabled Children

Background

The Supplemental Security Income (SSI) program provides cash assistance to people who are disabled, aged, or both and who have low income and few assets. In 2018, 15 percent of SSI recipients, or 1.2 million people, are projected to be disabled children under age 18, receiving an average monthly benefit of $686. To receive benefits, those children must have marked, severe functional limitations and usually must live in a household with low income and few assets.

Option

This option would eliminate SSI benefits for disabled children.

Effects on the Budget

The Congressional Budget Office estimates that eliminating disabled children's benefits would reduce mandatory spending by $100 billion through 2028. That estimate is based on CBO's projection of the total number of SSI recipients who are disabled children and on their average projected benefits in the 10-year period. Because the number of disabled children and their average benefits are projected to increase over time, the annual savings from this option would also generally increase. However, both the projected number of disabled children and their average projected benefits are inherently uncertain.

Because annual discretionary appropriations cover SSI's administrative costs, this option would generate an extra $9 billion in discretionary savings over the same period. CBO arrived at that estimate using the projected total cost of administering SSI and the percentage reduction in the program's mandatory outlays due to this option, both of which are uncertain.

Other Effects

Eliminating SSI benefits for children may encourage their parents to increase work and thereby increase earnings. (Research has not shown that parents reduce work in anticipation of receiving SSI benefits for their child; however, in one study, parents who stopped receiving their child's SSI benefit significantly increased their work hours and fully offset the loss of the benefit [Deshpande 2016].) Currently, the program's traits create a disincentive for parents to increase work. Unlike another program that aims to help families achieve self-sufficiency, Temporary Assistance for Needy Families, SSI imposes no work requirements on parents and does not explicitly limit how long their child may receive benefits as long as the child remains medically and financially eligible. Furthermore, SSI benefits decrease by 50 cents with each additional dollar of parental earnings above a certain threshold, depending on household size and other factors. (For example, in calendar year 2018, for a single parent with one child who is disabled and with no other income, the SSI benefit is generally reduced after the parent earns more than $1,625 per month.) Although increased work by those parents would support financial self-sufficiency, such a change might have negative effects on the outcomes of disabled children.

Another argument for this option is that, rather than provide a cash benefit to the children's parents without ensuring that they spend the money on disabled children, policymakers could choose to support those children in other ways. For example, states could receive grants to make an integrated suite of educational, medical, and social services available to disabled children and their families. To the extent that funds that would have been used to provide SSI benefits for children were instead used for a new program or to increase the resources of other existing programs, federal savings from this option would be correspondingly reduced.

An argument against the option is that this program serves a disadvantaged group. SSI is the only federal income support program geared toward families with disabled children, and SSI benefits reduce child poverty rates. Families with disabled children are typically more susceptible to economic hardship than other families because of both direct and indirect costs associated with children's disabilities. (Direct costs can include additional out-of-pocket health care expenses, spending on adaptive equipment, and behavioral and educational services. Indirect costs for the parents of disabled children can include lost productivity and negative health effects.)