lives, or whether a specific job vacancy exists for him, or whether he would be hired if he applied for work” (Section 223 and 1614 of the Act).

During the past two decades, SSDI and SSI programs have experienced faster than expected growth. In 2000 the Social Security Administration (SSA) paid $50 billion in cash benefits to 5.0 million workers under the SSDI program. Between 1989 and 2000, the number of workers receiving SSDI benefits rose from about 2.9 million to nearly 5.0 million, an increase of almost 74 percent. Likewise, in 2000, SSA paid $19 billion in benefits to 4.0 million blind and disabled working age people under the SSI program, an increase of 74 percent between 1989 and 2000 (SSA, 2001d). To a large extent this growth reflects the increases in the number of people applying for and entering the programs and a decrease in the number leaving the programs.

BACKGROUND

Statement of the Problem

Historically the disability program has been subject to rapid increases followed by periods of decline in rates of application, awards, and terminations. These fluctuations appear to arise both from external forces and from program and policy shifts. In the future, disability policymakers must have the ability to carefully gauge the effect of any policy changes in order to avoid excessive shifts in program experience resulting from such action that may stimulate, in turn, major policy reactions in the opposite direction. The challenge for SSA is to understand the reasons for fluctuations in the growth of disability rolls in order to better manage the programs and guide the anticipated growth over the coming decades.

In 1992, the Board of Trustees of the Old Age Survivors Insurance and Disability Insurance Trust Funds requested the Department of Health and Human Services (DHHS) to conduct an analysis of the SSDI program experience to explain the rapid program growth before the Board could make any recommendation to the Congress on statutory adjustments (DHHS, 1992). The DHHS study found that although the increases in applications for adult disability benefits cannot be explained definitively, many factors may have contributed to the growth in the number of people receiving Social Security disability benefits. These factors include the economic downturn in the late 1980s and early 1990s in the United States; structural changes in the labor market; demographic trends such as changes in the size, composition, and characteristics of the working age population; changes in public policies and the types of disabling impairments that are recognized and diagnosed for disability cash benefits; and a decrease in the average age of new beneficiaries with a resulting increase



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