Working Papers

Reinventing Disability Policy


The disability system in the United States spends approximately $120 billion a year to keep millions of working-aged people on poverty-level stipends while essentially banning them from working. A reinvented system would focus on moving people from dependence to independence with flexible vocational rehabilitation vouchers, work-oriented assessments, and simple rules that guarantee that nobody would ever be made worse off by working. A problem with creating a system that combines work and partial disability benefits is that it may attract new entrants onto the disability rolls. A key insight of this proposal is that these generous work incentives can be tested on the current six million working-age recipients without inducing entry that raises costs.