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<h1 itemprop="headline">Simplifying the Supplemental Security Income Program: Options for Eliminating the Counting of <span class="nobr">In-kind</span> Support and Maintenance</h1>
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<div id="hByline">by <span itemprop="author">Richard Balkus, James Sears, Susan Wilschke, and Bernard Wixon</span><br>Social Security Bulletin, <abbr title="Volume">Vol.</abbr> 68, <abbr title="Number">No.</abbr> 4, 2008 (released March 2009)</div>
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<p id="synopsis" itemprop="description">The Supplemental Security Income (<abbr class="spell">SSI</abbr>) program's policies for both living arrangements and <span class="nobr">in-kind</span> support and maintenance (<abbr class="spell">ISM</abbr>) are intended to direct program benefits toward persons with the least income and support, but they are considered cumbersome to administer and, in some cases, poorly targeted. Benefit restructuring would simplify the <abbr class="spell">SSI</abbr> program by replacing <abbr class="spell">ISM</abbr>-related benefit reductions with benefit reductions for recipients living with another adult. This article presents a microsimulation analysis of two benefit restructuring options, showing that the distributional outcomes under both options are inconsistent with a basic rationale of the <abbr class="spell">SSI</abbr> program.</p>
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<hr />
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<div class="eightypercent">
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<p>Richard Balkus and Susan Wilschke are with the Office of Program Development and Research, Office of Retirement and Disability Policy (<abbr class="spell">ORDP</abbr>), Social Security Administration (<abbr class="spell">SSA</abbr>). Jim Sears is with the Division of Program Evaluation, Office of Research, Evaluation, and Statistics (<abbr class="spell">ORES</abbr>), <abbr class="spell">ORDP</abbr>, <abbr class="spell">SSA</abbr>. Bernard Wixon is with the Division of Economic Research, <abbr class="spell">ORES</abbr>, <abbr class="spell">ORDP</abbr>, <abbr class="spell">SSA</abbr>.</p>
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<p><i>Acknowledgments</i>: The authors are indebted to several individuals for their thoughtful comments: Paul Davies, Michael Leonesio, Linda Maxfield, Scott Muller, Kalman Rupp, Gloria Senden, and Paul Van de Water.</p>
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<p>Contents of this publication are <a href="/policy/accessibility.html">not copyrighted</a>; any items may be reprinted, but citation of the <i>Social Security Bulletin</i> as the source is requested. The findings and conclusions presented in the <i>Bulletin</i> are those of the authors and do not necessarily represent the views of the Social Security Administration.</p>
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<h2>Summary and Introduction</h2>
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<p>The Supplemental Security Income (<abbr class="spell">SSI</abbr>) program, administered by the Social Security Administration (<abbr class="spell">SSA</abbr>), is the income source of last resort for the <span class="nobr">low-income</span> aged, blind, and disabled. As the nation's largest income-assistance program, it paid $38 billion in benefits in calendar year 2006 to roughly 7 million recipients per month. Because <abbr class="spell">SSI</abbr> is means tested, administering the program often requires month-to-month, recipient-by-recipient benefit recomputations. An increase in a recipient's income usually triggers a benefit recomputation. Or, an increase in the recipient's financial assets, which may render the recipient ineligible, would also prompt a recomputation. With this crush of ongoing recomputations, it is of little wonder that administrative simplification is a time-honored mantra for program administrators.</p>
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<p>Against this backdrop, simplifying policy on food or shelter support to recipients from family and friends is especially compelling. Current policy on such <span class="nobr">in-kind</span> support requires that recipients answer detailed questions about household composition, household expenses, and any contributions from the recipient and members of the household toward household expenses. This detailed household information is collected not only for initial applications, but also when there are changes in address, household composition, or household expenses. Moreover, although this information is collected for most recipients, much of it is unverifiable. Without question, these policies are well-intentioned because they target more <span class="nobr">means-tested</span> benefits to recipients with no <span class="nobr">in-kind</span> support. And, to be more equitable, there are separate computations for those who contribute significantly to household expenses and those who do not. Good intentions notwithstanding, there is a consensus among policymakers and program administrators that current <abbr class="spell">SSI</abbr> policies on <span class="nobr">in-kind</span> support and maintenance (<abbr class="spell">ISM</abbr>) are complex, intrusive, and sometimes inequitable. In addition, these policies create a disincentive for families and friends who might otherwise increase food or shelter support to recipients. Finally, year-after-year <abbr class="spell">ISM</abbr> is shown to be a major source of payment error.</p>
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<p>Over the years, policymakers have evaluated several alternatives to <abbr class="spell">ISM</abbr> in terms of (1) program costs; (2) distributional, poverty, and incentive effects; and (3) the degree to which they would actually simplify current policy. Of these alternatives, benefit restructuring has emerged as an interesting option because it simply eliminates all <abbr class="spell">ISM</abbr>-related benefit reductions, assuring program simplification. The benefit restructuring options considered here incorporate a cost neutrality constraint; that is, the cost of increasing benefits to recipients with <abbr class="spell">ISM</abbr> is fully offset by other benefit reductions. This study is a microsimulation analysis of the redistributional, poverty, and incentive effects of these benefit restructuring options.</p>
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<p>Under benefit restructuring, benefit reductions for <abbr class="spell">ISM</abbr> recipients would be eliminated and, to offset the program cost increases, a smaller benefit reduction would be implemented for the large number of adult recipients who live with other adults. The rationale for these benefit reductions is that such recipients gain from economies of scale because of the shared costs of housing, food, and utilities. Administratively, the logic of benefit restructuring is that <abbr class="spell">SSI</abbr> should stop reducing benefits for <abbr class="spell">ISM</abbr> based on detailed tracking of income and contributions among family and friends. Instead, program administrators would determine the benefit size by simply establishing whether the recipient lives with another adult.</p>
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<p>The study concludes that the two benefit restructuring options considered here would streamline current <abbr class="spell">ISM</abbr> policy by eliminating <abbr class="spell">ISM</abbr>-related benefit reductions, raising benefits for the 9 percent of recipients with <abbr class="spell">ISM</abbr>. Not only would benefit restructuring vastly simplify program administration, it would also encourage food and housing contributions to <abbr class="spell">SSI</abbr> recipients from family and friends. However, because of budget neutrality, we find that these options entail redistribution of $1.2 billion in annual benefits, affecting 50 percent to 75 percent of all recipients. In the end, this analysis brings to light a distributional concern affecting both options considered. Under the purest form of benefit restructuring, for example, those currently receiving <abbr class="spell">ISM</abbr> would have a benefit increase averaging $164 per month, funded through a benefit reduction averaging $44 per month for those who share housing. The distributional concern is that the initial per capita household incomes of those with benefit increases are, on average, 42 percent higher than the incomes of those with reductions, an outcome that is at odds with basic objectives of <span class="nobr">means-tested</span> programs.</p>
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<p>This article begins with an overview of the current benefit structure and rules for counting <abbr class="spell">ISM</abbr>, highlighting shortcomings and reviewing past simplification efforts. Next, we examine two benefit restructuring options, assessing how the options would simplify the program and discussing trade-offs, in terms of equity and incentive issues. We then provide a distributional analysis of recipients who would be better or worse off under either option. The article focuses on key subgroups of recipients, in terms of changes in <abbr class="spell">SSI</abbr> benefits and poverty status.</p>
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<h2>Current Policy: Description</h2>
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<p>Policies on living arrangements and <abbr class="spell">ISM</abbr> take into account the value of goods that some <abbr class="spell">SSI</abbr> recipients receive when living with others or from family or friends living outside the household. The Social Security Administration (<abbr class="spell">SSA</abbr>) uses a complex procedure to make <abbr class="spell">ISM</abbr> and living arrangement determinations for applicants when calculating the <abbr class="spell">SSI</abbr> benefit. There are two preliminary issues: (1) the living arrangement determination—whether <abbr class="spell">SSI</abbr> applicants are living in their own households or in the household of another adult, receiving food and shelter, and (2) the <abbr class="spell">ISM</abbr> determination—the type and amount of <abbr class="spell">ISM</abbr>, if any. In turn, these determinations affect the benefit computation. The full income guarantee, known as the federal benefit rate (<abbr class="spell">FBR</abbr>), is used for applicants living in their own households, while a reduced rate is used for those living in the household of another.<sup><a href="#mn1" id="mt1">1</a></sup> In addition, if the full standard is used, the benefit is reduced if the applicant receives <span class="nobr">in-kind</span> contributions of food or shelter.</p>
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<h3>Living Arrangement Categories</h3>
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<p><abbr class="spell">SSA</abbr> uses four living arrangement categories to determine payment amounts. These categories are discussed in detail below.</p>
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<p><b>Living Arrangement A.</b> <abbr class="spell">SSA</abbr> first determines whether an adult, noninstitutionalized individual is living in his or her "own" household or living in the household of another. Living in one's "own" household means the person owns the home, has rental liability, or pays a pro rata share of household expenses. The benefit for such a person is based on 100 percent of the income guarantee. The great majority of recipients, 81 percent, are in living arrangement A (<abbr class="spell">SSA</abbr> 2007b, Table 5).</p>
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<p><b>Living Arrangement B.</b> This category is used when a recipient lives in the household of another and receives both food and shelter from other members of the household. This recipient is subject to a <span class="nobr">one-third</span> reduction in the income guarantee. Almost 5 percent of <abbr class="spell">SSI</abbr> recipients are in living arrangement B.</p>
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<p><b>Living Arrangement C.</b> This is the category used for an eligible child younger than age 18 who lives with a parent. The benefit for such a recipient is based on 100 percent of the income guarantee. Twelve percent of <abbr class="spell">SSI</abbr> recipients are in living arrangement C. An eligible child is not charged with <abbr class="spell">ISM</abbr> for the food and shelter provided by the parent. The financial support provided by a parent is accounted for in the process called deeming.</p>
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<p><b>Living Arrangement D.</b> This category includes an eligible person living in a public or private medical institution, with Medicaid paying more than 50 percent of the cost of his or her care. This person is limited to an <abbr class="spell">SSI</abbr> payment of $30 per month. Only 2 percent of all <abbr class="spell">SSI</abbr> recipients are in this group. <abbr class="spell">ISM</abbr> is not countable for individuals who are in living arrangement D.</p>
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<h3>Two <span class="nobr">In-kind</span> Support and Maintenance Rules</h3>
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<p>There are two ways <abbr class="spell">ISM</abbr> is counted. Both rules are used in conjunction with the living arrangement determination, but they have different effects on the benefit computation.</p>
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<p><b>Value of the <span class="nobr">One-Third</span> Reduction Rule (<abbr class="spell">VTR</abbr>).</b> A recipient who lives in another person's household and receives <i>both</i> food and shelter from within the household (living arrangement B) has his or her income guarantee reduced by <span class="nobr">one-third</span>. This reduction is taken in lieu of counting the actual value of the support that is received. However, a recipient who has some rental liability or pays at least a pro rata share of the household food and shelter costs would not be classified under living arrangement B and would not be subject to the <abbr class="spell">VTR</abbr> rule.</p>
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<p><b>Presumed Maximum Value Rule (<abbr class="spell">PMV</abbr>).</b> If an individual or a couple receives <abbr class="spell">ISM</abbr> but is not subject to the <abbr class="spell">VTR</abbr> rule, then the <abbr class="spell">PMV</abbr> rule applies. This rule would apply to an individual who lives in another person's household but does not receive both food and shelter from that person, or lives in his or her own household and receives <span class="nobr">in-kind</span> support from either someone inside or outside of the household. The <abbr class="spell">PMV</abbr> equals <span class="nobr">one-third</span> of the income guarantee plus $20 (the general income exclusion) and caps the amount of <abbr class="spell">ISM</abbr> that <abbr class="spell">SSA</abbr> counts. An amount less than the <abbr class="spell">PMV</abbr> may be used to calculate a person's payment if the individual can show that the actual value of the <abbr class="spell">ISM</abbr> received is lower than the <abbr class="spell">PMV</abbr>. Four percent of recipients are subject to the <abbr class="spell">PMV</abbr>. In 2006, 41 percent of recipients who received <abbr class="spell">ISM</abbr> under this rule were charged the maximum amount ($221 in 2006), while an additional 40 percent received <abbr class="spell">ISM</abbr> valued at $100 or less, and the remaining recipients were charged <abbr class="spell">ISM</abbr> ranging from $100 to the maximum amount. The <abbr class="spell">PMV</abbr> rule can require detailed documentation of contributions to the recipient and household expenses paid by all household members on an ongoing basis.</p>
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<p>As shown in Table 1, 9 percent of recipients receive food or shelter support that result in a reduction in benefits. Roughly 5 percent of recipients live in the household of another (<abbr class="spell">VTR</abbr>) and a reduced income guarantee is used to calculate their benefits. For an additional 4 percent, the full income-guarantee level is used, but the benefits are reduced to offset contributions of food or shelter (<abbr class="spell">PMV</abbr>). Combining the two groups, roughly 6 percent of recipients receive substantial contributions that result in benefit reductions of <span class="nobr">one-third</span> of the <abbr class="spell">FBR</abbr>, while the remaining 3 percent have smaller reductions. The elderly have slightly higher rates of <abbr class="spell">ISM</abbr> receipt than do other age categories.</p>
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<div class="table" id="table1">
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<table>
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<caption><span class="tableNumber">Table 1. </span>Percentage of <abbr class="spell">SSI</abbr> recipients receiving <abbr class="spell">ISM</abbr>, by age group, December 2006</caption>
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<colgroup span="1" style="width:5em"></colgroup>
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<colgroup span="4" style="width:5em"></colgroup>
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<thead>
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<tr>
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<th class="stubHeading" scope="col"><abbr class="spell">ISM</abbr> type</th>
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<th scope="col">Under 18</th>
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<th scope="col"><span class="nobr">18–64</span></th>
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<th scope="col">65 or older</th>
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<th scope="col">All</th>
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</tr>
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</thead>
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<tbody>
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<tr>
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<th class="stub0" scope="row"><abbr class="spell">VTR</abbr> rule</th>
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<td>3.8</td>
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<td>4.5</td>
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<td>5.6</td>
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<td>4.7</td>
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</tr>
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<tr>
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<th class="stub0" scope="row"><abbr class="spell">PMV</abbr> rule</th>
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<td>4.6</td>
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<td>3.6</td>
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<td>5.4</td>
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<td>4.2</td>
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</tr>
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<tr>
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<th class="stub1" scope="row">Total</th>
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<td>8.4</td>
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<td>8.0</td>
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<td>11.0</td>
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<td>8.9</td>
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</tr>
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</tbody>
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<tfoot>
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<tr>
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|
<td class="firstNote" colspan="5">SOURCE: Social Security Administration, Supplemental Security Record (Characteristic Extract Record format), 100 percent data.</td>
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|
</tr>
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|
<tr>
|
|
<td class="lastNote" colspan="5">NOTE: <abbr class="spell">SSI</abbr> = Supplemental Security Income; <abbr class="spell">ISM</abbr> = in-kind support and maintenance; <abbr class="spell">VTR</abbr> = value of the <span class="nobr">one-third</span> reduction— recipients living in the household of another, receiving both food and shelter, and, hence, whose benefits are based on a federal benefit rate reduced by <span class="nobr">one-third</span>; <abbr class="spell">PMV</abbr> = presumed maximum value—recipients receiving <abbr class="spell">ISM</abbr>, but not subject to the <abbr class="spell">VTR</abbr> rule.</td>
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|
</tr>
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|
</tfoot>
|
|
</table>
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|
</div>
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|
<h3>Guaranteeing a Minimal Level of Support for <abbr class="spell">SSI</abbr> Recipients</h3>
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|
<p>The <abbr class="spell">SSI</abbr> benefit rate structure uses two income guarantees—an individual <abbr class="spell">FBR</abbr> ($637 per month in 2008) and a couple <abbr class="spell">FBR</abbr> ($956 per month in 2008), which is 150 percent of the individual level. In December 2006, 8 percent of recipients were members of eligible couples (<abbr class="spell">SSA</abbr> 2007b, Table 11). These income guarantees are adjusted for price changes annually.</p>
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|
<p>The income guarantee can be thought of as the level of monthly income guaranteed to <abbr class="spell">SSI</abbr> recipients. That is, an individual recipient with no other income would receive $637 per month, and a recipient with income from other sources would receive a benefit equal to the difference between the income guarantee and his or her countable income. Income can exceed this level if income exclusions or state supplements are involved.<sup><a href="#mn2" id="mt2">2</a></sup></p>
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|
<p>As with <abbr class="spell">ISM</abbr>, assistance from other programs can also help a recipient meet his or her basic needs. Recipients may be eligible for other federally funded assistance such as food stamps and housing assistance. Forty percent of <abbr class="spell">SSI</abbr> recipients live in households that receive food stamps and 9 percent receive housing assistance (<abbr class="spell">SSA</abbr> 2008, Table 7). Of those recipients who live with another adult and, therefore, would be affected by this policy change (both those experiencing an increase or a decrease in benefits), roughly <span class="nobr">one-quarter</span> live in households that receive food stamps.<sup><a href="#mn3" id="mt3">3</a></sup></p>
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<p>Although the <abbr class="spell">FBR</abbr> does not guarantee poverty-level income, nonetheless, many <abbr class="spell">SSI</abbr> recipients live in households with income exceeding the poverty threshold.<sup><a href="#mn4" id="mt4">4</a></sup> An <abbr class="spell">SSI</abbr> recipient may not have access to the income of other household members, but may benefit from living in a household that can afford to spend more on food and shelter. By contrast, income from a parent (in the case of a minor child) or an ineligible spouse is counted as income to that recipient, less certain exclusions. Furthermore, any cash support provided by other household members is counted as income to the <abbr class="spell">SSI</abbr> recipient and the <abbr class="spell">SSI</abbr> benefit is reduced accordingly.</p>
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|
<p>Despite the benefit reductions that are based on living arrangements and <abbr class="spell">ISM</abbr>, wide disparities remain in household income between subgroups of <abbr class="spell">SSI</abbr> recipients. Table 2 shows that adult recipients living with another adult have the lowest rates of household poverty (24 percent), compared with a 90 percent poverty rate for adults who live alone or only with minor children. As this analysis will later explain, among those recipients who live with others, there are differences in poverty rates and levels of household income between those who currently receive <abbr class="spell">ISM</abbr> and those who do not.</p>
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<div class="table" id="table2">
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|
<table>
|
|
<caption><span class="tableNumber">Table 2. </span>Household poverty distribution of current <abbr class="spell">SSI</abbr> recipients, by living arrangement (in percent)</caption>
|
|
<colgroup span="1" style="width:15em"></colgroup>
|
|
<colgroup span="1" style="width:6em"></colgroup>
|
|
<colgroup span="4" style="width:6em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" rowspan="2" scope="colgroup">Living arrangement/age category</th>
|
|
<th rowspan="2" scope="colgroup">Recipient distribution</th>
|
|
<th class="spanner" colspan="4" scope="colgroup">Household income as a percentage of the poverty threshold</th>
|
|
</tr>
|
|
<tr>
|
|
<th scope="col">Under 100 (poor)</th>
|
|
<th scope="col">101 to 200</th>
|
|
<th scope="col">201 to 300</th>
|
|
<th scope="col">Over 300</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub0" scope="row">Adult with eligible spouse</th>
|
|
<td>9</td>
|
|
<td>52</td>
|
|
<td>36</td>
|
|
<td>4</td>
|
|
<td>8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Adult with another adult <sup>a</sup></th>
|
|
<td>49</td>
|
|
<td>24</td>
|
|
<td>44</td>
|
|
<td>15</td>
|
|
<td>16</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Adult without another adult</th>
|
|
<td>27</td>
|
|
<td>90</td>
|
|
<td>10</td>
|
|
<td>0</td>
|
|
<td>0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Child recipient</th>
|
|
<td>15</td>
|
|
<td>43</td>
|
|
<td>41</td>
|
|
<td>12</td>
|
|
<td>5</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="6">SOURCE: Social Security Administration's Financial Eligibility Model.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="note" colspan="6">NOTES: <abbr class="spell">SSI</abbr> = Supplemental Security Income.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="6">a. Includes adult recipients living with either nonspouse adults or ineligible spouses.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<p>Differences in household poverty levels are not surprising because <abbr class="spell">SSI</abbr> makes payments to individuals or couples, whereas household poverty measures take into account income of other household members. <abbr class="spell">SSI</abbr> benefit calculations are based primarily on the income of the individual or couple, but deeming and <abbr class="spell">ISM</abbr>/living arrangement policies are used to adjust for support from other household members or, for that matter, from family and friends who live outside the household. This focus on the individual, as well as the counting of <span class="nobr">in-kind</span> income, distinguishes the <abbr class="spell">SSI</abbr> program from many <span class="nobr">means-tested</span> programs. Most other <span class="nobr">means-tested</span> programs, in the United States and elsewhere, do not count <span class="nobr">in-kind</span> income when determining eligibility and benefit amounts. The Food Stamp Program (<abbr class="spell">FSP</abbr>), Temporary Assistance for Needy Families (<abbr class="spell">TANF</abbr>), and needs-based programs in countries such as Canada and Australia, for example, exclude <span class="nobr">in-kind</span> income from eligibility and benefit calculations. The <abbr class="spell">FSP</abbr> and <abbr class="spell">TANF</abbr>, however, pay benefits to a household based on the income of all household members, with some exclusions. The <abbr class="spell">FSP</abbr> compares household income with federal poverty guidelines in determining eligibility.</p>
|
|
<h2>Current Policy: Administrative, Incentive, and Equity Issues</h2>
|
|
<p>The state programs that preceded <abbr class="spell">SSI</abbr> often undertook detailed analysis of the household budget to establish an applicant's level of financial need. One of the founding principles of <abbr class="spell">SSI</abbr> is that, as a program that is national in scope, it should be based on a "flat grant" approach that does not involve program administrators in the detailed household budgets of millions of recipients. The law creating the <abbr class="spell">SSI</abbr> program included the <span class="nobr">one-third</span> reduction provision so that <abbr class="spell">SSA</abbr> would not have to determine the actual value of room and board when a recipient lived with a friend or relative. A congressional committee report<sup><a href="#mn5" id="mt5">5</a></sup> indicated that the reduction would apply regardless of whether the individual made any payment toward household expenses. Although the provision was intended to be simple to administer, it did not adequately address differences in living arrangements among <abbr class="spell">SSI</abbr> recipients. <abbr class="spell">SSA</abbr> created the <abbr class="spell">PMV</abbr> rule and the pro rata-share concept through regulations in an attempt to better address equity among recipients. However, these regulations compromised the simplification objective of the "flat grant" approach: "Over the life of the program, those policies have become increasingly complex as a result of new legislation, court decisions, and <abbr class="spell">SSA</abbr>'s own efforts to achieve benefit equity for all recipients" (Government Accountability Office (<abbr class="spell">GAO</abbr>) 2002). This section illustrates some of the <span class="nobr">trade-offs</span> that policymakers face when seeking to simplify complex program rules.</p>
|
|
<h3>Administrative Complexity</h3>
|
|
<p>Although only 9 percent of recipients receive <abbr class="spell">ISM</abbr>, <abbr class="spell">SSA</abbr> must determine the appropriate living arrangement category for all recipients and must determine receipt of <abbr class="spell">ISM</abbr> for most recipients. In some cases, the determination is straightforward, such as establishing whether a recipient owns a home. For other cases, a determination may involve a detailed accounting of household expenses and the individual's contribution, to establish whether the individual pays his or her pro rata share of expenses. In addition to initial claims, this determination must be repeated if there is any change in household composition or expenses that might affect the amount of the <abbr class="spell">SSI</abbr> benefit.</p>
|
|
<p><abbr class="spell">ISM</abbr> and living arrangements often cause payment errors because recipients frequently do not understand or comply with reporting requirements. According to the fiscal year 2006 <i><abbr class="spell">SSI</abbr> Payment Accuracy Report</i> (<abbr class="spell">SSA</abbr> 2007a), living arrangements and <abbr class="spell">ISM</abbr> have been among the major causes of overpayment and underpayment deficiency dollars in recent years. For example, in 2006 living arrangements and <abbr class="spell">ISM</abbr> accounted for $494 million in overpayment deficiency dollars and $339 million in underpayment deficiency dollars.</p>
|
|
<p>Although <abbr class="spell">SSI</abbr> eligibility was intended to be determined on the basis of objective information on income and resources, development of <abbr class="spell">ISM</abbr> is often based on estimates of food and shelter expenses provided by the applicant or recipient and verified by other household members. As stated by the Social Security Advisory Board, "The [living arrangements/<span class="nobr">in-kind</span> support] process is weak because most allegations…(such as household expenses, rental subsidy, separate purchase of food, sharing, etc.) are verified using a corroborative statement from someone known to the applicant and who may have a motivation to be less than objective and truthful. There is no practical way to verify these issues" (<abbr class="spell">SSA</abbr> 2005, 9).</p>
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|
<p>Despite specific instructions for developing <abbr class="spell">ISM</abbr>, the same level of contribution could result in different payment amounts, depending on how it is allocated. Consider, for example, a recipient who lives with three others and contributes $300 per month toward household expenses. The monthly housing expenses are $1,200 and the food expenses are $500. If the recipient's contribution was allocated toward overall household expenses, it would fall short of his or her pro rata share ($425) and the recipient would be considered to be in living arrangement B, with a <span class="nobr">one-third</span> reduction ($212) in the <abbr class="spell">FBR</abbr>. However, under current program rules, the recipient could earmark his or her contribution specifically for shelter expenses. In that case, the recipient is meeting his or her pro rata share of shelter expenses and would be assigned to living arrangement A. The recipient would be charged for the <abbr class="spell">ISM</abbr> he or she receives as food, and the <abbr class="spell">SSI</abbr> benefit would be reduced by $125, his or her pro rata share of food. Hence some recipients avoid benefit reductions by earmarking contributions. By implication, such recipients hold an arbitrary, unfair advantage over uninformed recipients with similar financial resources, by virtue of information received from program administrators or advocacy groups.</p>
|
|
<p>Similarly, <abbr class="spell">ISM</abbr> policies have complicated the administration of the Medicare Modernization Act of 2003. This act established a <span class="nobr">low-income</span> subsidy program for drug premiums and <span class="nobr">co-payments</span>. Although the program generally follows the <abbr class="spell">SSI</abbr> definition of income and resources, it used higher income and resource limits and a simpler approach to defining <abbr class="spell">ISM</abbr>. However, despite this attempt to streamline the Medicare <span class="nobr">low-income</span> subsidy process, criticism of the use of <abbr class="spell">ISM</abbr> in the <span class="nobr">low-income</span> subsidy process persisted. With the Medicare Improvement for Patients and Providers Act of 2008 (Public Law 110-275), Congress voted to exclude <span class="nobr">in-kind</span> support and maintenance from income when determining eligibility for the <span class="nobr">low-income</span> subsidy program.</p>
|
|
<h3>Equity and Incentive Issues</h3>
|
|
<p>In some cases, policies on living arrangements and <abbr class="spell">ISM</abbr> promote equitable treatment among <abbr class="spell">SSI</abbr> recipients by reducing benefits for those individuals who receive support from others. <abbr class="spell">SSI</abbr> recipients who receive <abbr class="spell">ISM</abbr> may live with others who have income levels that allow the household to spend more on food and shelter than is the case for <abbr class="spell">SSI</abbr> recipients in other household situations. Consider the example of a disabled adult living with his or her parents and contributing $300 toward the household expenses. The parents' combined monthly income of $4,000 allows them to spend about $2,100 a month on food and shelter expenses. The parents' income is not considered in determining the amount of the <abbr class="spell">SSI</abbr> benefit for their disabled adult child. However, the disabled adult child gains from living in a household that spends more on food and shelter expenses ($700 per household member) than what could be spent relying solely on his or her <abbr class="spell">SSI</abbr> benefit. Because this person's $300 payment is less than the prescribed pro rata share, he or she is considered "living in the household of another" and subject to the <span class="nobr">one-third</span> reduction. Hence, <abbr class="spell">SSI</abbr> policies accurately target benefit reductions to some recipients living in households that are better off than others.</p>
|
|
<p>However, <abbr class="spell">ISM</abbr> rules do not always result in equal treatment among recipients. The policies also allow some recipients to live in households that are better off than others and not be charged <abbr class="spell">ISM</abbr>. Consider the same example with one change. The parents have paid off their mortgage, reducing their monthly household expenses to $900. The disabled adult child's monthly payment now equals his or her pro rata share. Therefore, he or she is no longer subject to the <span class="nobr">one-third</span> reduction. The outcome is higher monthly household income with lower household expenses—a result one would not expect from a <span class="nobr">means-tested</span> program.</p>
|
|
<p>The incentives created by living arrangement and <abbr class="spell">ISM</abbr> policies are another area of concern. <abbr class="spell">ISM</abbr> policies may discourage friends and family from making contributions of food and shelter to <abbr class="spell">SSI</abbr> recipients because such contributions are offset by dollar-for-dollar reductions in the recipient's benefits, up to $232 (the presumed maximum value, or equivalently <span class="nobr">one-third</span> of the income guarantee plus $20).<sup><a href="#mn6" id="mt6">6</a></sup> There are no further benefit reductions after contributions reach <span class="nobr">one-third</span> of the income guarantee. This creates a substantial disincentive to contribute a modest amount (less than $232) and no disincentive at all for contributions above $232. A family making a $200 rent payment for a family member receiving <abbr class="spell">SSI</abbr> will see a dollar-for-dollar reduction in the <abbr class="spell">SSI</abbr> recipient's monthly benefit. In practical terms, after the benefit reduction, the recipient would be no better off. On the other hand, a family able to afford a monthly rent contribution of $800 would induce a benefit reduction of $232, so the standard of living of the <abbr class="spell">SSI</abbr> recipient would be substantially improved. By capping the amount of contributions that are counted, some recipients receiving large amounts of <abbr class="spell">ISM</abbr> receive the same benefits as recipients who receive smaller amounts of <abbr class="spell">ISM</abbr>, which seems inequitable.</p>
|
|
<p>Why are there such disincentives in the <abbr class="spell">SSI</abbr> program? From one perspective, current <abbr class="spell">SSI</abbr> policy simply treats <span class="nobr">in-kind</span> income just as it does income from other sources. Unearned income results in a dollar-for-dollar reduction in the <abbr class="spell">SSI</abbr> benefit. However, policymakers may wish to encourage contributions to <abbr class="spell">SSI</abbr> recipients, just as current policies are designed to encourage earnings.</p>
|
|
<p>Charts 1 and 2 compare treatment of <abbr class="spell">ISM</abbr> with treatment of earnings in calculating <abbr class="spell">SSI</abbr> benefits. Chart 1 shows how <abbr class="spell">SSI</abbr> benefits are reduced for different levels of monthly earnings. The first $65 of earnings does not result in any benefit reduction, encouraging recipients to enter the labor force.<sup><a href="#mn7" id="mt7">7</a></sup> At higher levels of earnings, benefits are reduced $1 for each $2 of earnings. Recipients are able to raise their standards of living by working and continuing to receive some <abbr class="spell">SSI</abbr> benefits until monthly earnings reach $1,359. In contrast, current <abbr class="spell">ISM</abbr> policy imposes a dollar-for-dollar (100 percent) benefit reduction for all contributions less than $232 per month and no reduction for support above that level (see Chart 2). Under <abbr class="spell">SSI</abbr> earnings policies, <i>low earners</i> enjoy the effects of the earnings disregards, and under <abbr class="spell">ISM</abbr>, it is <i>recipients whose families make large contributions</i> (over $232 per month) who benefit from an <abbr class="spell">ISM</abbr> disregard. Although current <abbr class="spell">ISM</abbr> policies have several rationales, little attention has been given to formulating policies that actually encourage contributions to <abbr class="spell">SSI</abbr> recipients by their families and friends.</p>
|
|
<div class="chartCenter">
|
|
<div class="chart400" id="chart1">
|
|
<div class="title">Chart 1.<br>Treatment of earnings under <abbr class="spell">SSI</abbr></div>
|
|
<div class="scrollChart"><img src="v68n4p15_chart01.jpg" alt="Illustrative line chart with text description below." width="294" height="335" /></div>
|
|
<div class="altText"><a class="altTextToggle" href="">Show text description</a>
|
|
<div class="align-left">
|
|
<p class="noindent"><b>Text description fo Chart 1.<br>Treatment of earnings under <abbr class="spell">SSI</abbr></b></p>
|
|
<p class="noindent">Chart 1 is a line chart that illustrates the rate at which <abbr class="spell">SSI</abbr> benefits are reduced according to recipient earnings.</p>
|
|
<p class="noindent">The vertical axis is labeled "benefit reduction rate (percent)." Zero, 50, and 100 percent intervals are marked on the axis. The horizontal axis is labeled "monthly earnings (dollars)." Dollar amounts from zero to 325 are marked on the axis in <span class="nobr">65-dollar</span> increments.</p>
|
|
<p class="noindent">A line showing the benefit reduction rate starts at the zero-zero coordinate and remains flat at the zero-percent level moving left to right until it reaches 65 dollars. At that point the line turns 90 degrees and moves directly upward until it reaches the 50 percent level. Then the line again turns 90 degrees and moves left to right at the 50 percent level where it remains beyond the <span class="nobr">325-dollar</span> mark.</p>
|
|
</div>
|
|
</div>
|
|
<div class="firstNote">SOURCE: Current program rules.</div>
|
|
<div class="lastNote">NOTE: <abbr class="spell">SSI</abbr> = Supplemental Security Income.</div>
|
|
</div>
|
|
</div>
|
|
<div class="chartCenter">
|
|
<div class="chart400" id="chart2">
|
|
<div class="title">Chart 2.<br>Treatment of <abbr class="spell">ISM</abbr> contributions under <abbr class="spell">SSI</abbr></div>
|
|
<div class="scrollChart"><img src="v68n4p15_chart02.jpg" alt="Illustrative line chart with text description below." width="289" height="335" /></div>
|
|
<div class="altText"><a class="altTextToggle" href="">Show text description</a>
|
|
<div class="align-left">
|
|
<p class="noindent"><b>Text description for Chart 2.<br>Treatment of <abbr class="spell">ISM</abbr> contributions under <abbr class="spell">SSI</abbr></b></p>
|
|
<p class="noindent">Chart 2 is a line chart that illustrates the rate at which <abbr class="spell">SSI</abbr> benefits are reduced according to in-kind support and maintenance (<abbr class="spell">ISM</abbr>) contributions.</p>
|
|
<p class="noindent">The vertical axis is labeled "benefit reduction rate (percent)." Zero, 50, and 100 percent intervals are marked on the axis. The horizontal axis is labeled "monthly earnings (dollars)." Zero, 232, and 464 dollar amounts are marked on the axis.</p>
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|
<p class="noindent">A line showing the benefit reduction rate starts at the zero <span class="nobr">dollars-100</span> percent coordinate and remains flat at the <span class="nobr">100-percent</span> level moving left to right until it reaches 232 dollars. At that point the line turns 90 degrees and moves directly downward until it reaches the zero percent level. Then the line again turns 90 degrees and moves left to right at the zero percent level where it remains beyond the <span class="nobr">464-dollar</span> mark.</p>
|
|
</div>
|
|
</div>
|
|
<div class="firstNote">SOURCE: Current program rules.</div>
|
|
<div class="lastNote">NOTE: <abbr class="spell">ISM</abbr> = in-kind support and maintenance; <abbr class="spell">SSI</abbr> = Supplemental Security Income.</div>
|
|
</div>
|
|
</div>
|
|
<p>In contrast to assistance from family and friends, certain government or charitable assistance is not counted as income. For example, while a rent subsidy provided by a family member is counted as <abbr class="spell">ISM</abbr> and reduces the <abbr class="spell">SSI</abbr> benefit, government-funded housing subsidies are excluded by law. This discourages family members from helping and encourages reliance on government programs. In addition, the <span class="nobr">one-third</span> reduction might deter some recipients from living with others because it results in reduced benefits. Some recipients may choose less than optimal living situations in order to receive higher benefits.</p>
|
|
<p>With many strikes against it, how have current <abbr class="spell">ISM</abbr>/living arrangement policies managed to survive? First, the estimated program costs of eliminating <abbr class="spell">ISM</abbr>-related benefit reductions would total roughly $1.2 billion annually.<sup><a href="#mn8" id="mt8">8</a></sup> Second, the distributional impact of counting <abbr class="spell">ISM</abbr> is consistent with the goals of the program; that is, current policies demonstrably target benefit reductions to recipients who live in higher-income households and who receive support—sometimes substantial support—from family and friends. Efforts to simplify current policy must be viewed against this backdrop.</p>
|
|
<p>The question for policymakers is whether the administrative complexity required to make <abbr class="spell">ISM</abbr>/living arrangement determinations is justified or whether there is a better way to adjust for differences in household situations and support for <abbr class="spell">SSI</abbr> recipients. The challenge is to target benefits to those individuals with the greatest need, but to do so in a way that can be administered fairly, efficiently, and without an increase in program costs.</p>
|
|
<h2>Past Simplification Efforts</h2>
|
|
<p>Since the inception of the <abbr class="spell">SSI</abbr> program in 1974, at least 10 workgroups, studies, and reports have focused on simplifying <abbr class="spell">SSI</abbr> policies. Most of these efforts contained options or recommendations for simplifying living arrangements and <abbr class="spell">ISM</abbr> (<abbr class="spell">SSA</abbr> 2000). Despite the sustained focus on this policy area, limited progress has been made toward simplifying these rules. Recent actions include a change in regulations that removed clothing from the definition of <span class="nobr">in-kind</span> support and maintenance so that recipients are no longer required to report gifts of clothing.<sup><a href="#mn9" id="mt9">9</a></sup></p>
|
|
<p>Since <abbr class="spell">GAO</abbr>'s designation of <abbr class="spell">SSI</abbr> as a high-risk program in 1997 (a designation removed by <abbr class="spell">GAO</abbr> in 2003), benefit restructuring has received more attention than any other approach for simplifying living arrangement and <abbr class="spell">ISM</abbr> rules. <abbr class="spell">SSA</abbr>'s <abbr class="spell">SSI</abbr> Legislation Workgroup that was convened in 1997 to provide legislative options for reducing payment errors analyzed this approach and identified several options for benefit restructuring in its final report.</p>
|
|
<p><abbr class="spell">SSA</abbr>'s former Office of Policy (currently the Office of Retirement and Disability Policy) in its December 2000 report, <i>Simplifying the Supplemental Security Income Program: Challenges and Opportunities</i> (<abbr class="spell">SSA</abbr> 2000), further analyzed benefit restructuring as one option for simplifying living arrangement and <abbr class="spell">ISM</abbr> policies. While noting the potential for program simplification, the report expressed concern about the effect that benefit restructuring would have on the program objectives of benefit equity and benefit adequacy. It emphasized the need to further assess the options and the trade-offs between maximizing the underlying objectives of the program and simplifying the program.</p>
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|
<p><abbr class="spell">GAO</abbr> (2002) acknowledged <abbr class="spell">SSA</abbr>'s 2000 report on <abbr class="spell">SSI</abbr> program simplification and recommended that <abbr class="spell">SSA</abbr> "identify and move forward in implementing cost-effective options simplifying complex living arrangements and <span class="nobr">in-kind</span> support and maintenance policies, with particular attention to those policies most vulnerable to fraud, waste, and abuse." <abbr class="spell">SSA</abbr> concurred with the recommendation and also stated in its <abbr class="spell">SSI</abbr> Corrective Action Plan that it would further analyze the distributional effects of options for simplifying living arrangement and <abbr class="spell">ISM</abbr> policies.</p>
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<h2><abbr class="spell">ISM</abbr> Elimination Options: Description</h2>
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|
<p>Two policy options are simulated in this analysis. Both options implement budget neutrality by reducing federal income-guarantee levels for adult <abbr class="spell">SSI</abbr> recipients living with other adults, offsetting the cost of benefit increases to current recipients with <abbr class="spell">ISM</abbr>:</p>
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<p>The 7/0 option reduces the <abbr class="spell">FBR</abbr> by 7 percent for adults. It does not change the <abbr class="spell">FBR</abbr> for child recipients, nor does it change the <abbr class="spell">FBR</abbr> for adult recipients with no other adults in the household.The 10/5 option reduces the <abbr class="spell">FBR</abbr> by 10 percent for adults, with no reduction for child recipients. However, this option does include a 5 percent <abbr class="spell">FBR</abbr> increase for adult recipients with no other adults in the household—a subgroup with a poverty rate of 90 percent.</p>
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|
<p>Under these policy options, <span class="nobr">in-kind</span> support would no longer be counted in determining eligibility or the monthly benefit amount, resulting in benefit increases for those receiving <abbr class="spell">ISM</abbr>. The budgetary logic of benefit restructuring is that the substantial benefit reductions associated with <abbr class="spell">ISM</abbr> would end, and instead, a smaller benefit reduction would be assessed to each of the large number of recipients—about half of all recipients—who live with other adults.<sup><a href="#mn10" id="mt10">10</a></sup> The two benefit restructuring options considered here have been modeled with a budget neutrality constraint. That is, program cost increases associated with eliminating <abbr class="spell">ISM</abbr> are offset by savings—in this case, benefit reductions—of equal value. These reductions do not represent the amount recipients save by sharing housing, but rather reflect the program savings required to offset the cost of eliminating <abbr class="spell">ISM</abbr>. Cost estimates generated as a byproduct of our simulation analysis have shown that each of the two options is approximately budget neutral.<sup><a href="#mn11" id="mt11">11</a></sup></p>
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<h2><abbr class="spell">ISM</abbr> Elimination Options: Administrative, Incentive, and Equity Issues</h2>
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<p>The options described here would simplify the administration of the <abbr class="spell">SSI</abbr> program. However, as discussed below, they involve other trade-offs.</p>
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<h3>Administrative Complexity</h3>
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|
<p>Chart 3 is a simplified flow chart of the current living arrangement and <abbr class="spell">ISM</abbr> process that illustrates the complexity of the process, especially at certain steps.<sup><a href="#mn12" id="mt12">12</a></sup> In the most complex cases, the process involves a detailed accounting of household expenses and the individual's contribution, to determine whether the individual pays his or her pro rata share of expenses.</p>
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<div class="chartCenter">
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<div class="chart700" id="chart3">
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<div class="title">Chart 3.<br>Simplified illustration of current <abbr class="spell">SSI</abbr> living arrangement and <abbr class="spell">ISM</abbr> process</div>
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<div class="scrollChart"><img src="v68n4p15_chart03.jpg" alt="Flowchart with text description below." width="700" height="796" /></div>
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<div class="altText"><a class="altTextToggle" href="">Show text description</a>
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<div class="align-left">
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<p class="noindent"><b>Text description for Chart 3.<br>Simplified illustration of current <abbr class="spell">SSI</abbr> living arrangement and <abbr class="spell">ISM</abbr> process</b></p>
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<p class="noindent">Chart 3 is a flow chart showing the following.</p>
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<p class="noindent">If home ownership or rental liability equals yes then use the presumed maximum value rule: Consider <abbr class=spell>ISM</abbr> from inside the household:</p>
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<ul>
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<li>Calculate household food and shelter expenses (10 items)</li>
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<li>Determine recipient's contribution</li>
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<li>Compute <abbr class=spell>ISM</abbr> (divide expenses by number of household members and subtract recipient's contribution</li>
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</ul>
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<p class="noindent">then apply the full federal benefit rate (<abbr class=spell>FBR</abbr>) for living arrangement A.</p>
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<p class="noindent">If home ownership or rental liability equals no then evaluate separate purchase or consumption:</p>
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<ul>
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<li>Does individual shop for own food?</li>
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<li>Does individual eat meals elsewhere?</li>
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<li>Is contribution designated specifically for food or shelter?</li>
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</ul>
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<p class="noindent">if yes:</p>
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<ul>
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<li>Calculate household food and shelter expenses (10 items)</li>
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<li>Determine recipient's contribution</li>
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<li>Compute <abbr class=spell>ISM</abbr> (divide expenses by number of household members and subtract recipient's contribution</li>
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</ul>
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<p class="noindent">then apply the full federal benefit rate (<abbr class=spell>FBR</abbr>) for living arrangement A.</p>
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<p class="noindent">If home ownership, rental liability, and separate purchase for consumption equal no then evaluate the pro rata share:</p>
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<ul>
|
|
<li>Calculate household food and shelter expenses (10 items)</li>
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|
<li>Divide expenses by number of household members</li>
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<li>Compare recipient's contribution to pro rata share</li>
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</ul>
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<p class="noindent">if yes, use <abbr class=spell>PMV</abbr> rule: Consider <abbr class=spell>ISM</abbr> from outside the household:</p>
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<ul>
|
|
<li>Calculate household food and shelter expenses (10 items)</li>
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|
<li>Subtract payments made by household members</li>
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<li>Allocate <abbr class=spell>ISM</abbr> to household members</li>
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<li>Did someone provide rent free shelter? Is the landlord a relative? If so, the case is developed as a rental subsidy.</li>
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</ul>
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<p class="noindent">then apply the full federal benefit rate (<abbr class=spell>FBR</abbr>) for living arrangement A.</p>
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<p class="noindent">If home ownership, rental liability, separate purchase or consumption, and pro rata share equal no then use the Value of the One-Third Reduction Rule: living arrangement B and apply the <abbr class=spell>FBR</abbr> with a one-third reduction.</p>
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</div>
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</div>
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<div class="firstNote">SOURCE: Current program rules.</div>
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<div class="lastNote">NOTE: <abbr class="spell">SSI</abbr> = Supplemental Security Income; <abbr class="spell">ISM</abbr> = in-kind support and maintenance; <abbr class="spell">PMV</abbr> = presumed maximum value; <abbr class="spell">FBR</abbr> = federal benefit rate.</div>
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</div>
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</div>
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<p>With benefit restructuring, <abbr class="spell">SSA</abbr> would not be concerned with the amount of household expenses, the recipient's contributions to those expenses, or how they are paid. These options reflect an approach that is much simpler administratively. Living arrangement development would be limited to determining whether the recipient lives with an adult, as shown in Chart 4. <abbr class="spell">SSA</abbr> estimates that the administrative savings from option 7/0—totally eliminating <abbr class="spell">ISM</abbr>—would be $70 million annually, after start-up costs associated with the first year of implementation.<sup><a href="#mn13" id="mt13">13</a></sup></p>
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<div class="chartCenter">
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<div class="chart400" id="chart4">
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<div class="title">Chart 4.<br><abbr class="spell">SSI</abbr> living arrangement development process under benefit restructuring</div>
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<div class="scrollChart"><img src="v68n4p15_chart04.jpg" alt="Flowchart describing the Supplemental Security Income living arrangement development process under benefit restructuring. If recipient lives with another adult (other than eligible spouse), then apply the reduced federal benefit rate. If recipient does not live with another adult (other than eligible spouse) then apply the full federal benefit rate (either individual or couple)." width="293" height="335" /></div>
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<div class="firstNote">SOURCE: Benefit restructuring options: 7/0 and 10/5.</div>
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<div class="lastNote">NOTE: <abbr class="spell">SSI</abbr> = Supplemental Security Income; <abbr class="spell">FBR</abbr> = federal benefit rate.</div>
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</div>
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</div>
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<p>Under benefit restructuring, <abbr class="spell">SSA</abbr> would continue to rely on recipients to report certain living arrangement changes, but only whether the recipient began or stopped living with an adult. Certainly, payment accuracy would improve because program administrators would no longer have to track changes in household expenses and contributions, nor would they need to process the array of allegations and confirmations underlying the information currently collected on expenses and contributions.</p>
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<h3>Equity and Incentive Issues</h3>
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<p>Under the options considered here, contributions of food or shelter would no longer be tracked or measured by <abbr class="spell">SSA</abbr>, nor would recipients receiving such assistance have their benefits reduced. <span class="nobr">In-kind</span> contributions of any amount would be encouraged because benefit reductions would no longer be assessed to those receiving contributions of shelter, utilities, or food. Encouraging <span class="nobr">in-kind</span> support seems consistent not only with recent efforts to augment benefits from public programs with private or charitable contributions, but also with long-term efforts to increase the level of well-being of as many recipients as possible.</p>
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<p>However, one further implication of such a policy should be noted. The objective of <abbr class="spell">SSI</abbr> policy is generally to bring the incomes of <abbr class="spell">SSI</abbr> recipients to the approximate level of the income-guarantee level. This is mostly true, even though some recipients have higher incomes as a result of provisions such as state supplements, income exclusions, and the exclusion of <abbr class="spell">ISM</abbr> above the current limit. The policies considered here, by removing the benefit reductions assessed to recipients with <abbr class="spell">ISM</abbr>, would permit and encourage higher levels of economic well-being for some <abbr class="spell">SSI</abbr> recipients—those receiving support in the form of food or shelter. If one assumes that all <abbr class="spell">SSI</abbr> recipients should enjoy a similar level of economic well-being, this may seem inequitable. However, one implication of encouraging <span class="nobr">in-kind</span> support is that the income guarantee would increasingly represent a <i>minimum</i> income level, rather than a <i>uniform</i> income level. And, among those with higher levels of economic well-being would be not only recipients with earnings, state supplements, or their own homes, but also those receiving <span class="nobr">in-kind</span> contributions.<sup><a href="#mn14" id="mt14">14</a></sup></p>
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<p>Depending on the size of the benefit reductions adopted, the options may also discourage recipients from sharing housing. Under current policies, benefit reductions that are due to <abbr class="spell">ISM</abbr> may discourage shared housing, especially for recipients who might be subject to a <span class="nobr">one-third</span> reduction in the <abbr class="spell">FBR</abbr> if they cannot pay their pro rata share of expenses. However, most recipients who live with other adults do not have their benefits reduced. But under the policy options considered here, such recipients would experience either a 7 percent or a 10 percent reduction in the income-guarantee level used to compute their benefits. In addition, under the 10/5 option, the income-guarantee level used to compute benefits for recipients living alone would be increased by 5 percent. The net result is that option 10/5 would create a gap of roughly 17 percent between the income-guarantee level for recipients living alone and those living with other adults. Such a difference in income guarantees and resulting benefits may represent a disincentive to share housing for roughly half of all <abbr class="spell">SSI</abbr> recipients.</p>
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<h2><abbr class="spell">ISM</abbr> Elimination Options: Simulated Effects</h2>
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<p>This section describes the distributional and poverty effects of benefit restructuring on <abbr class="spell">SSI</abbr> recipients.</p>
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<h3>Simulation Methodology</h3>
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<p>The simulation results are derived from the Financial Eligibility Model (<abbr class="spell">FEM</abbr>)—a static <abbr class="spell">SSI</abbr> simulation model developed by <abbr class="spell">SSA</abbr>'s Office of Research, Evaluation, and Statistics staff—which has been substantially enhanced in order to analyze benefit restructuring options. The <abbr class="spell">FEM</abbr> includes a detailed <abbr class="spell">SSI</abbr> benefit calculator, as well as behavioral modules that estimate whether individuals exit or enter the <abbr class="spell">SSI</abbr> rolls, based on the policy options simulated. The <abbr class="spell">FEM</abbr> is based on the Survey of Income and Program Participation (<abbr>SIPP</abbr>), exact matched to <abbr class="spell">SSA</abbr> administrative records using Social Security numbers (<abbr class="spell">SSN</abbr>s) reported by survey respondents. The survey estimates reflect the noninstitutional population of the United States, and all data represent the reference month of November 1996, but dollar estimates have been price-adjusted to 2008. The Supplemental Security Record data are the source of information on current-pay status and monthly federal benefits for participants, as well as other programmatic characteristics of participants, such as receipt of <abbr class="spell">ISM</abbr>. See the appendix for more detailed information on the simulation methodology.</p>
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<p><b>Summary Effects.</b> Charts 5 and 6 present summary results for the two simulations. Chart 5 illustrates the basic distributional features of benefit restructuring. We see that 9 percent of beneficiaries have benefit increases under option 7/0. The majority of these recipients live with other adults and would also be subject to the 7 percent reduction, although the effect on their monthly <abbr class="spell">SSI</abbr> benefits would be a net increase. A subset of that group would receive their increases from the elimination of <abbr class="spell">ISM</abbr> and would not be subject to any benefit reductions because they either live alone, they live only with minor children, or they are members of an eligible couple. The benefit increases for this entire group would be substantial—on average the monthly increase in benefits would be $164, a 44 percent increase. Under option 10/5, current <abbr class="spell">ISM</abbr> recipients would also experience substantial benefit increases, averaging $147 per month, but, in addition, there would be a second recipient subgroup with increases in benefits. By design, option 10/5 provides benefit increases to the 27 percent of recipients who live alone or with minor children. Their benefits would increase by $38 per month, on average. In all, 34 percent of recipients would have benefit increases under option 10/5.</p>
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<div class="chartCenter">
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<div class="chart700" id="chart5">
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<div class="title">Chart 5.<br>Percentage distribution of <abbr class="spell">SSI</abbr> recipients under option 7/0</div>
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<div class="scrollChart"><img src="v68n4p15_chart05.jpg" alt="Pie chart with tabular version below." width="700" height="258" /></div>
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<div class="table altTable"><a class="altToggle" href="">Show as table</a>
|
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<table>
|
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<caption><span class="tableNumber">Table equivalent for Chart 5. </span>Percentage distribution of <abbr class="spell">SSI</abbr> recipients under option <span class="nobr">7/0</span></caption>
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<colgroup span="1" style="width:25em"></colgroup>
|
|
<colgroup span="1" style="width:6em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" scope="col">Distribution of <abbr class="spell">SSI</abbr> recipients</th>
|
|
<th scope="col">Percent</th>
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</tr>
|
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</thead>
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<tbody>
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<tr>
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<th class="stub0" scope="row">New recipients</th>
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<td>1</td>
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</tr>
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<tr>
|
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<th class="stub0" scope="row">New program exits <sup>a</sup></th>
|
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<td>3</td>
|
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</tr>
|
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<tr>
|
|
<th class="stub0" scope="row">Increased benefits: currently charged with <abbr class="spell">ISM</abbr>; average net increase of $164 per month</th>
|
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<td>9</td>
|
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</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Reduced benefits: live with others, not charged <abbr class="spell">ISM</abbr>; average benefit reduction of $44 per month</th>
|
|
<td>38</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">No change</th>
|
|
<td>49</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="noNotes" colspan="2"> </td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="firstNote">SOURCE: 1996 <abbr>SIPP</abbr> panel and Social Security administrative records for November 1996, projected to December 2005.</div>
|
|
<div class="note">NOTE: Data universe: Initial <abbr class="spell">SSI</abbr> recipients plus (estimated) new participants, for a total of 6,961,000 recipients.
|
|
<div class="newNote"><abbr class="spell">SSI</abbr> = Supplemental Security Income; <abbr class="spell">ISM</abbr> = in-kind support and maintenance; <abbr class="spell">SIPP</abbr> = Survey of Income and Program Participation.</div>
|
|
</div>
|
|
<div class="lastNote">a. The program exits include recipients who become ineligible for benefits as well as recipients classified as nonparticipants under the 7/0 simulation. The net change in recipients is -2 percent.</div>
|
|
</div>
|
|
</div>
|
|
<div class="chartCenter">
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|
<div class="chart700" id="chart6">
|
|
<div class="title">Chart 6.<br>Percentage distribution of <abbr class="spell">SSI</abbr> recipients under option 10/5</div>
|
|
<div class="scrollChart"><img src="v68n4p15_chart06.jpg" alt="Pie chart with tabular version below." width="700" height="246" /></div>
|
|
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
|
|
<table>
|
|
<caption><span class="tableNumber">Table equivalent for Chart 6. </span>Percentage distribution of <abbr class="spell">SSI</abbr> recipients under option <span class="nobr">10/5</span></caption>
|
|
<colgroup span="1" style="width:25em"></colgroup>
|
|
<colgroup span="1" style="width:6em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" scope="col">Distribution of <abbr class="spell">SSI</abbr> recipients</th>
|
|
<th scope="col">Percent</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub0" scope="row">New recipients</th>
|
|
<td>2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">New program exits <sup>a</sup></th>
|
|
<td>5</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Increased benefits: live alone; average benefit increase of $38 per month</th>
|
|
<td>27</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Increased benefits: currently charged with <abbr class="spell">ISM</abbr>; average net increase of $147 per month</th>
|
|
<td>7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Reduced benefits: live with others, not charged <abbr class="spell">ISM</abbr>; average benefit reduction of $63 per month</th>
|
|
<td>36</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">No change</th>
|
|
<td>23</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="noNotes" colspan="2"> </td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="firstNote">SOURCE: 1996 <abbr>SIPP</abbr> panel and Social Security administrative records for November 1996, projected to December 2005.</div>
|
|
<div class="note">NOTE: Data universe: Initial <abbr class="spell">SSI</abbr> recipients plus (estimated) new participants, for a total of 7,020,000 recipients.
|
|
<div class="newNote"><abbr class="spell">SSI</abbr> = Supplemental Security Income; <abbr class="spell">ISM</abbr> = in-kind support and maintenance; <abbr class="spell">SIPP</abbr> = Survey of Income and Program Participation.</div>
|
|
</div>
|
|
<div class="lastNote">a. The program exits include recipients who become ineligible for benefits as well as recipients classified as nonparticipants under the 10/5 simulation. The net change in recipients is -2 percent.</div>
|
|
</div>
|
|
</div>
|
|
<p>For both policy options, the costs of benefit increases to the 8 percent to 9 percent of recipients with <abbr class="spell">ISM</abbr> are recovered through smaller reductions to about half of all recipients—those who share housing.<sup><a href="#mn15" id="mt15">15</a></sup> Under 10/5, the benefit reductions assessed to those in shared housing are larger, covering the additional cost of benefit increases to recipients living alone.</p>
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|
<p>Under each option, about half of all <abbr class="spell">SSI</abbr> recipients are assessed benefit reductions, although roughly 9 percent also would have larger, offsetting benefit increases because of the elimination of <abbr class="spell">ISM</abbr> provisions. The residual group—about 41 percent of all recipients—would have net reductions in their monthly benefits, including those leaving the rolls (see Charts 5 and 6). This group is comprised mainly of those who live with other adults, but are not currently receiving <abbr class="spell">ISM</abbr>. Under 7/0, the average reduction would be $44 per month for those living with others, and under 10/5 it would be $63 per month. The simulations show a net reduction in <abbr class="spell">SSI</abbr> recipients of 2 percent under each option.</p>
|
|
<p>The two policy options are broad in scope. In all, over 50 percent of recipients would have benefit changes under 7/0, and over 75 percent of recipients would have benefit changes under 10/5.</p>
|
|
<p><b>Subgroup Effects.</b> The key subgroups include those whose benefits increase or whose benefits are reduced under the two options. We begin by considering option 7/0.</p>
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|
<p>Under 7/0, there are two key subgroups: (1) 9 percent of recipients receiving <abbr class="spell">ISM</abbr> under current law would have benefit increases that are often sizable, and (2) 41 percent of recipients who are living in shared housing would have benefit reductions (see Chart 5). The latter subgroup is composed of those who we estimate would exit the <abbr class="spell">SSI</abbr> rolls (3 percent) and those we estimate to have benefit reductions but who would continue to receive benefits (38 percent).<sup><a href="#mn16" id="mt16">16</a></sup></p>
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|
<p>Let us consider the demographic and household characteristics of these two groups, as shown in Table 3, columns 2 and 3. Column 2 includes those with net benefit increases under 7/0. Most recipients with net benefit increases live with other adults and, hence, would be assessed the 7 percent <abbr class="spell">FBR</abbr> reductions; however their <abbr class="spell">ISM</abbr>-related benefit increases would be larger, yielding net increases. Ten percent of both the aged and disabled adults have net benefit increases (see Table 3, column 2). Male recipients, white non-Hispanics, and Hispanic/other recipients are somewhat more likely to have <abbr class="spell">ISM</abbr> and, consequently, net benefit increases.</p>
|
|
<div class="table" id="table3">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 3. </span>Adult <abbr class="spell">SSI</abbr> recipients with increased and reduced benefits under <abbr class="spell">ISM</abbr> elimination options, by living arrangement and demographic characteristics, changes in benefits, and income measures</caption>
|
|
<colgroup span="1" style="width:15em"></colgroup>
|
|
<colgroup span="1" style="width:7em"></colgroup>
|
|
<colgroup span="4" style="width:6em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" rowspan="3" id="c1">Recipient characteristic</th>
|
|
<th rowspan="3" id="c2">Presimulation recipient distribution (1)</th>
|
|
<th class="spanner" colspan="4" id="c3"><abbr class="spell">ISM</abbr> elimination options</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="spanner" colspan="2" id="c4" headers="c3">7/0</th>
|
|
<th class="spanner" colspan="2" id="c5" headers="c3">10/5</th>
|
|
</tr>
|
|
<tr>
|
|
<th id="c6" headers="c3 c4">Those with increases (2)</th>
|
|
<th id="c7" headers="c3 c4">Those with reductions (3)</th>
|
|
<th id="c8" headers="c3 c5">Those with increases (4)</th>
|
|
<th id="c9" headers="c3 c5">Those with reductions (5)</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<td></td>
|
|
<th class="panel" colspan="5" id="r1">Percentage with benefit changes <sup>a</sup></th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r2" headers="r1 c1">Living arrangements</th>
|
|
<td colspan="5"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r3" headers="r1 r2 c1">Adult with eligible spouse</th>
|
|
<td headers="r1 r2 r3 c2">10</td>
|
|
<td headers="r1 r2 r3 c3 c4 c6">0</td>
|
|
<td headers="r1 r2 r3 c3 c4 c7">0</td>
|
|
<td headers="r1 r2 r3 c3 c5 c8"> b</td>
|
|
<td headers="r1 r2 r3 c3 c5 c9">0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r4" headers="r1 r2 c1">Adult without another adult</th>
|
|
<td headers="r1 r2 r4 c2">32</td>
|
|
<td headers="r1 r2 r4 c3 c4 c6">4</td>
|
|
<td headers="r1 r2 r4 c3 c4 c7">0</td>
|
|
<td headers="r1 r2 r4 c3 c5 c8">96</td>
|
|
<td headers="r1 r2 r4 c3 c5 c9">0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r5" headers="r1 r2 c1">Adult with another adult <sup>c</sup></th>
|
|
<td headers="r1 r2 r5 c2">58</td>
|
|
<td headers="r1 r2 r5 c3 c4 c6">14</td>
|
|
<td headers="r1 r2 r5 c3 c4 c7">82</td>
|
|
<td headers="r1 r2 r5 c3 c5 c8">14</td>
|
|
<td headers="r1 r2 r5 c3 c5 c9">82</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r6" headers="r1 c1">Aged/disabled adults</th>
|
|
<td colspan="5"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r7" headers="r1 r6 c1">Aged</th>
|
|
<td headers="r1 r6 r7 c2">32</td>
|
|
<td headers="r1 r6 r7 c3 c4 c6">10</td>
|
|
<td headers="r1 r6 r7 c3 c4 c7">32</td>
|
|
<td headers="r1 r6 r7 c3 c5 c8">48</td>
|
|
<td headers="r1 r6 r7 c3 c5 c9">31</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r8" headers="r1 r6 c1">Disabled adults</th>
|
|
<td headers="r1 r6 r8 c2">68</td>
|
|
<td headers="r1 r6 r8 c3 c4 c6">10</td>
|
|
<td headers="r1 r6 r8 c3 c4 c7">54</td>
|
|
<td headers="r1 r6 r8 c3 c5 c8">38</td>
|
|
<td headers="r1 r6 r8 c3 c5 c9">52</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r9" headers="r1 c1">Sex</th>
|
|
<td colspan="5"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r10" headers="r1 r9 c1">Men</th>
|
|
<td headers="r1 r9 r10 c2">42</td>
|
|
<td headers="r1 r9 r10 c3 c4 c6">12</td>
|
|
<td headers="r1 r9 r10 c3 c4 c7">52</td>
|
|
<td headers="r1 r9 r10 c3 c5 c8">34</td>
|
|
<td headers="r1 r9 r10 c3 c5 c9">40</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r11" headers="r1 r9 c1">Women</th>
|
|
<td headers="r1 r9 r11 c2">58</td>
|
|
<td headers="r1 r9 r11 c3 c4 c6">9</td>
|
|
<td headers="r1 r9 r11 c3 c4 c7">43</td>
|
|
<td headers="r1 r9 r11 c3 c5 c8">46</td>
|
|
<td headers="r1 r9 r11 c3 c5 c9">37</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r12" headers="r1 c1">Race/ethnicity</th>
|
|
<td colspan="5"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r13" headers="r1 r12 c1">White non-Hispanic</th>
|
|
<td headers="r1 r12 r13 c2">49</td>
|
|
<td headers="r1 r12 r13 c3 c4 c6">11</td>
|
|
<td headers="r1 r12 r13 c3 c4 c7">42</td>
|
|
<td headers="r1 r12 r13 c3 c5 c8">44</td>
|
|
<td headers="r1 r12 r13 c3 c5 c9">41</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r14" headers="r1 r12 c1">Black non-Hispanic</th>
|
|
<td headers="r1 r12 r14 c2">29</td>
|
|
<td headers="r1 r12 r14 c3 c4 c6">8</td>
|
|
<td headers="r1 r12 r14 c3 c4 c7">52</td>
|
|
<td headers="r1 r12 r14 c3 c5 c8">43</td>
|
|
<td headers="r1 r12 r14 c3 c5 c9">50</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r15" headers="r1 r12 c1">Hispanic and other</th>
|
|
<td headers="r1 r12 r15 c2">22</td>
|
|
<td headers="r1 r12 r15 c3 c4 c6">11</td>
|
|
<td headers="r1 r12 r15 c3 c4 c7">49</td>
|
|
<td headers="r1 r12 r15 c3 c5 c8">34</td>
|
|
<td headers="r1 r12 r15 c3 c5 c9">48</td>
|
|
</tr>
|
|
<tr>
|
|
<td></td>
|
|
<th class="panel" colspan="5" id="r16">Changes in monthly <abbr class="spell">SSI</abbr> benefits <sup>d</sup> (average $)</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub2" id="r17" headers="r16 c1">All adult recipients</th>
|
|
<td headers="r16 r17 c2">…</td>
|
|
<td headers="r16 r17 c3 c4 c6">164</td>
|
|
<td headers="r16 r17 c3 c4 c7">-44</td>
|
|
<td headers="r16 r17 c3 c5 c8">63</td>
|
|
<td headers="r16 r17 c3 c5 c9">-63</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r18" headers="r16 c1">Adult with eligible spouse</th>
|
|
<td headers="r16 r18 c2">…</td>
|
|
<td headers="r16 r18 c3 c4 c6">…</td>
|
|
<td headers="r16 r18 c3 c4 c7">…</td>
|
|
<td headers="r16 r18 c3 c5 c8">…</td>
|
|
<td headers="r16 r18 c3 c5 c9">…</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r19" headers="r16 c1">Adult without another adult</th>
|
|
<td headers="r16 r19 c2">…</td>
|
|
<td headers="r16 r19 c3 c4 c6">149</td>
|
|
<td headers="r16 r19 c3 c4 c7">…</td>
|
|
<td headers="r16 r19 c3 c5 c8">38</td>
|
|
<td headers="r16 r19 c3 c5 c9">…</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r20" headers="r16 c1">Adult with another adult <sup>c</sup></th>
|
|
<td headers="r16 r20 c2">…</td>
|
|
<td headers="r16 r20 c3 c4 c6">165</td>
|
|
<td headers="r16 r20 c3 c4 c7">-44</td>
|
|
<td headers="r16 r20 c3 c5 c8">147</td>
|
|
<td headers="r16 r20 c3 c5 c9">-63</td>
|
|
</tr>
|
|
<tr>
|
|
<td></td>
|
|
<th class="panel" colspan="5" id="r21"> Average percentage change</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub2" id="r22" headers="r21 c1">All adult recipients</th>
|
|
<td headers="r21 r22 c2">…</td>
|
|
<td headers="r21 r22 c3 c4 c6">44</td>
|
|
<td headers="r21 r22 c3 c4 c7">-9</td>
|
|
<td headers="r21 r22 c3 c5 c8">16</td>
|
|
<td headers="r21 r22 c3 c5 c9">-13</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r23" headers="r21 c1">Adult with eligible spouse</th>
|
|
<td headers="r21 r23 c2">…</td>
|
|
<td headers="r21 r23 c3 c4 c6">…</td>
|
|
<td headers="r21 r23 c3 c4 c7">…</td>
|
|
<td headers="r21 r23 c3 c5 c8">…</td>
|
|
<td headers="r21 r23 c3 c5 c9">…</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r24" headers="r21 c1">Adult without another adult</th>
|
|
<td headers="r21 r24 c2">…</td>
|
|
<td headers="r21 r24 c3 c4 c6">43</td>
|
|
<td headers="r21 r24 c3 c4 c7">…</td>
|
|
<td headers="r21 r24 c3 c5 c8">9</td>
|
|
<td headers="r21 r24 c3 c5 c9">…</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r25" headers="r21 c1">Adult with another adult <sup>c</sup></th>
|
|
<td headers="r21 r25 c2">…</td>
|
|
<td headers="r21 r25 c3 c4 c6">44</td>
|
|
<td headers="r21 r25 c3 c4 c7">-9</td>
|
|
<td headers="r21 r25 c3 c5 c8">39</td>
|
|
<td headers="r21 r25 c3 c5 c9">-13</td>
|
|
</tr>
|
|
<tr>
|
|
<td></td>
|
|
<th class="panel" colspan="5" id="r26">Income measures</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r27" headers="r26 c1">Median monthly per capita household income ($)</th>
|
|
<td headers="r26 r27 c2">…</td>
|
|
<td headers="r26 r27 c3 c4 c6">937</td>
|
|
<td headers="r26 r27 c3 c4 c7">659</td>
|
|
<td headers="r26 r27 c3 c5 c8">693</td>
|
|
<td headers="r26 r27 c3 c5 c9">653</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r28" headers="r26 c1">Median monthly per capita family income ($)</th>
|
|
<td headers="r26 r28 c2">…</td>
|
|
<td headers="r26 r28 c3 c4 c6">859</td>
|
|
<td headers="r26 r28 c3 c4 c7">632</td>
|
|
<td headers="r26 r28 c3 c5 c8">693</td>
|
|
<td headers="r26 r28 c3 c5 c9">615</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r29" headers="r26 c1">Presimulation rate for households (%)</th>
|
|
<td headers="r26 r29 c2">…</td>
|
|
<td headers="r26 r29 c3 c4 c6">27</td>
|
|
<td headers="r26 r29 c3 c4 c7">27</td>
|
|
<td headers="r26 r29 c3 c5 c8">75</td>
|
|
<td headers="r26 r29 c3 c5 c9">26</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r30" headers="r26 c1">Postsimulation rate for households (%)</th>
|
|
<td headers="r26 r30 c2">…</td>
|
|
<td headers="r26 r30 c3 c4 c6">24</td>
|
|
<td headers="r26 r30 c3 c4 c7">29</td>
|
|
<td headers="r26 r30 c3 c5 c8">72</td>
|
|
<td headers="r26 r30 c3 c5 c9">31</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="6">SOURCE: Social Security Administration's Financial Eligibility Model.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="note" colspan="6">NOTES: <abbr class="spell">SSI</abbr> = Supplemental Security Income; <abbr class="spell">ISM</abbr> = in-kind support and maintenance; <abbr class="spell">CPI</abbr> = Consumer Price Index; … = not applicable.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="note" colspan="6">a. The estimates are as a percentage of all recipients in each group. The table is based on persons receiving <abbr class="spell">SSI</abbr>. Estimates are based on adult recipients only. Although 5 percent of child recipients have a benefit increase under 7/0, by design benefit reductions are limited to adult recipients.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="note" colspan="6">b. Insufficient sample size.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="note" colspan="6">c. Includes adult recipients living with either a nonspouse adult or an ineligible spouse.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="6">d. The income and benefit estimates have been <abbr class="spell">CPI</abbr>-adjusted to represent 2008. The income measures are initial or presimulation measures.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<p>When we turn to those with benefit reductions, we see that, by design, 82 percent of those living with other adults have their benefits reduced (see Table 3, column 3). Most of the remaining recipients in shared housing are also assessed reductions, but they receive larger <abbr class="spell">ISM</abbr>-related benefit increases.<sup><a href="#mn17" id="mt17">17</a></sup> Fifty-four percent of disabled adults would have benefit reductions under 7/0, compared with 32 percent of the aged (see Table 3, column 3). This reflects the finding (from unpublished tabulations) that disabled individuals have a greater proclivity to share housing than do the elderly: 57 percent of disabled adults share housing, compared with 36 percent of the elderly. And, taking into account the preponderance of the disabled among <abbr class="spell">SSI</abbr> recipients, we find that 78 percent of adult recipients in shared housing—almost four out of five—are disabled adults. This is the case under both the 7/0 and 10/5 <abbr class="spell">ISM</abbr> elimination options. So the stereotypical recipient who shares housing and would have a benefit reduction is not an elderly person, but rather a disabled adult. And, by implication, disabled adults would bear a somewhat disproportionate share of the benefit reductions under these policy options.</p>
|
|
<p>Examining groups with benefit reductions by sex and race/ethnicity, we see, first of all, that half or almost half of all subgroups, 42 percent to 52 percent, have benefit reductions (see Table 3, column 3). This reflects a dominant feature of the living arrangements of adult <abbr class="spell">SSI</abbr> recipients—a substantial majority, 68 percent, share housing with other adults. Excluding disabled children, we find that more than half of the remaining recipients (58 percent) share housing with persons other than eligible spouses and, thus, are subject to benefit reductions (see Table 3, column 1). In particular, we find that male recipients are more likely than female recipients to share housing and also to have <abbr class="spell">ISM</abbr> (Table 3, columns 2 and 3). It follows that a higher percentage of men than women have benefit increases and also benefit reductions.</p>
|
|
<p>What do we know about the groups affected under the 7/0 option—those with benefit increases and those with reductions? Both groups are better off than typical <abbr class="spell">SSI</abbr> recipients. Their poverty rates are 27 percent (see Table 3, columns 2 and 3), compared with a poverty rate of 47 percent for all <abbr class="spell">SSI</abbr> recipients (see Table 4). However, poverty rates do not tell us whether household incomes are just above the poverty thresholds or much higher, so we consider the household and family incomes of the recipients with benefit increases and reductions. Under 7/0, the initial per capita household incomes of those with benefit increases are, on average, 42 percent higher than for recipients with benefit reductions (see Table 3, compare columns 2 and 3).<sup><a href="#mn18" id="mt18">18</a></sup> This leads to the following unintended distributional outcome: Under 7/0, a recipient subgroup with relatively high household incomes—those with <abbr class="spell">ISM</abbr>—would have benefit increases averaging 44 percent (see Table 3, column 2), funded by the group with lower incomes, those in shared housing. This outcome seems inconsistent with the most basic objective of any <span class="nobr">means-tested</span> program—to provide more assistance to those most in need.</p>
|
|
<div class="table" id="table4">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 4. </span>Changes in poverty under <abbr class="spell">SSI</abbr>'s <abbr class="spell">ISM</abbr> elimination options, by living arrangement and demographic characteristics</caption>
|
|
<colgroup span="1" style="width:15em"></colgroup>
|
|
<colgroup span="6" style="width:6em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" rowspan="3" id="c1">Living arrangement and demographic characteristic</th>
|
|
<th rowspan="3" id="c2">Presimulation recipient distribution (1)</th>
|
|
<th rowspan="3" id="c3">Presimulation poverty rate (2)</th>
|
|
<th class="spanner" colspan="4" id="c4">Poverty change: <abbr class="spell">ISM</abbr> elimination options</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="spanner" colspan="2" id="c5" headers="c4">Poverty rates <sup>a</sup></th>
|
|
<th class="spanner" colspan="2" id="c6" headers="c4">Poverty gap <sup>b</sup></th>
|
|
</tr>
|
|
<tr>
|
|
<th id="c7" headers="c4 c5">7/0 (3)</th>
|
|
<th id="c8" headers="c4 c5">10/5 (4)</th>
|
|
<th id="c9" headers="c4 c6">7/0 (5)</th>
|
|
<th id="c10" headers="c4 c6">10/5 (6)</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub2" id="r1" headers="c1">Total recipients <sup>c</sup></th>
|
|
<td headers="r1 c2">100</td>
|
|
<td headers="r1 c3">47</td>
|
|
<td headers="r1 c4 c5 c7">1.5</td>
|
|
<td headers="r1 c4 c5 c8">2.2</td>
|
|
<td headers="r1 c4 c6 c9">0.6</td>
|
|
<td headers="r1 c4 c6 c10">-2.7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r2" headers="c1">Living arrangements</th>
|
|
<td colspan="6"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r3" headers="r2 c1">Adult with eligible spouse</th>
|
|
<td headers="r2 r3 c2">9</td>
|
|
<td headers="r2 r3 c3">52</td>
|
|
<td headers="r2 r3 c4 c5 c7">2.6</td>
|
|
<td headers="r2 r3 c4 c5 c8">2.6</td>
|
|
<td headers="r2 r3 c4 c6 c9">-1.7</td>
|
|
<td headers="r2 r3 c4 c6 c10">-1.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r4" headers="r2 c1">Adult without another adult</th>
|
|
<td headers="r2 r4 c2">27</td>
|
|
<td headers="r2 r4 c3">90</td>
|
|
<td headers="r2 r4 c4 c5 c7">-0.5</td>
|
|
<td headers="r2 r4 c4 c5 c8">-2.5</td>
|
|
<td headers="r2 r4 c4 c6 c9">-3.4</td>
|
|
<td headers="r2 r4 c4 c6 c10">-17.9</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r5" headers="r2 c1">Adult with another adult <sup>d</sup></th>
|
|
<td headers="r2 r5 c2">49</td>
|
|
<td headers="r2 r5 c3">25</td>
|
|
<td headers="r2 r5 c4 c5 c7">1.5</td>
|
|
<td headers="r2 r5 c4 c5 c8">2.9</td>
|
|
<td headers="r2 r5 c4 c6 c9">7.3</td>
|
|
<td headers="r2 r5 c4 c6 c10">13.9</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r6" headers="r2 c1">Child recipient</th>
|
|
<td headers="r2 r6 c2">15</td>
|
|
<td headers="r2 r6 c3">42</td>
|
|
<td headers="r2 r6 c4 c5 c7">-0.1</td>
|
|
<td headers="r2 r6 c4 c5 c8">-0.1</td>
|
|
<td headers="r2 r6 c4 c6 c9">-2.6</td>
|
|
<td headers="r2 r6 c4 c6 c10">-2.4</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r7" headers="c1">Age group</th>
|
|
<td colspan="6"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r8" headers="r7 c1">Under 18</th>
|
|
<td headers="r7 r8 c2">15</td>
|
|
<td headers="r7 r8 c3">42</td>
|
|
<td headers="r7 r8 c4 c5 c7">0.0</td>
|
|
<td headers="r7 r8 c4 c5 c8">0.0</td>
|
|
<td headers="r7 r8 c4 c6 c9">-2.6</td>
|
|
<td headers="r7 r8 c4 c6 c10">-2.4</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r9" headers="r7 c1"><span class="nobr">18–64</span></th>
|
|
<td headers="r7 r9 c2">58</td>
|
|
<td headers="r7 r9 c3">46</td>
|
|
<td headers="r7 r9 c4 c5 c7">1.7</td>
|
|
<td headers="r7 r9 c4 c5 c8">3.3</td>
|
|
<td headers="r7 r9 c4 c6 c9">2.6</td>
|
|
<td headers="r7 r9 c4 c6 c10">-0.4</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r10" headers="r7 c1">65 or older</th>
|
|
<td headers="r7 r10 c2">27</td>
|
|
<td headers="r7 r10 c3">54</td>
|
|
<td headers="r7 r10 c4 c5 c7">1.8</td>
|
|
<td headers="r7 r10 c4 c5 c8">1.3</td>
|
|
<td headers="r7 r10 c4 c6 c9">-1.4</td>
|
|
<td headers="r7 r10 c4 c6 c10">-10.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r11" headers="c1">Sex</th>
|
|
<td colspan="6"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r12" headers="r11 c1">Male</th>
|
|
<td headers="r11 r12 c2">45</td>
|
|
<td headers="r11 r12 c3">43</td>
|
|
<td headers="r11 r12 c4 c5 c7">1.0</td>
|
|
<td headers="r11 r12 c4 c5 c8">1.7</td>
|
|
<td headers="r11 r12 c4 c6 c9">1.8</td>
|
|
<td headers="r11 r12 c4 c6 c10">0.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r13" headers="r11 c1">Female</th>
|
|
<td headers="r11 r13 c2">55</td>
|
|
<td headers="r11 r13 c3">51</td>
|
|
<td headers="r11 r13 c4 c5 c7">1.8</td>
|
|
<td headers="r11 r13 c4 c5 c8">2.6</td>
|
|
<td headers="r11 r13 c4 c6 c9">-0.4</td>
|
|
<td headers="r11 r13 c4 c6 c10">-5.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r14" headers="c1">Race/ethnicity</th>
|
|
<td colspan="6"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r15" headers="r14 c1">White non-Hispanic</th>
|
|
<td headers="r14 r15 c2">48</td>
|
|
<td headers="r14 r15 c3">46</td>
|
|
<td headers="r14 r15 c4 c5 c7">2.4</td>
|
|
<td headers="r14 r15 c4 c5 c8">3.3</td>
|
|
<td headers="r14 r15 c4 c6 c9">-0.3</td>
|
|
<td headers="r14 r15 c4 c6 c10">-5.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r16" headers="r14 c1">Black non-Hispanic</th>
|
|
<td headers="r14 r16 c2">31</td>
|
|
<td headers="r14 r16 c3">52</td>
|
|
<td headers="r14 r16 c4 c5 c7">0.7</td>
|
|
<td headers="r14 r16 c4 c5 c8">2.7</td>
|
|
<td headers="r14 r16 c4 c6 c9">-0.2</td>
|
|
<td headers="r14 r16 c4 c6 c10">-2.5</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r17" headers="r14 c1">Hispanic and other</th>
|
|
<td headers="r14 r17 c2">22</td>
|
|
<td headers="r14 r17 c3">42</td>
|
|
<td headers="r14 r17 c4 c5 c7">0.4</td>
|
|
<td headers="r14 r17 c4 c5 c8">-0.7</td>
|
|
<td headers="r14 r17 c4 c6 c9">3.6</td>
|
|
<td headers="r14 r17 c4 c6 c10">1.3</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="7">SOURCE: Social Security Administration's Financial Eligibility Model. </td>
|
|
</tr>
|
|
<tr>
|
|
<td class="note" colspan="7">NOTES: <abbr class="spell">SSI</abbr> = Supplemental Security Income; <abbr class="spell">ISM</abbr> = in-kind support and maintenance.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="note" colspan="7">a. Changes in poverty rates are percentage-point changes. </td>
|
|
</tr>
|
|
<tr>
|
|
<td class="note" colspan="7">b. Changes in the poverty gap are percent changes.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="note" colspan="7">c. This table is based on persons receiving <abbr class="spell">SSI</abbr>.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="7">d. Includes adult recipients living with either nonspouse adults or ineligible spouses.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<p>Option 10/5 incorporates the basic features of benefit restructuring, but overlays an additional benefit—a benefit increase for recipients living without other adults, funded by increasing the <abbr class="spell">FBR</abbr> reduction from 7 percent to 10 percent for those living with other adults (see Table 3, columns 4 and 5). The effect is to add a second group with benefit increases to subgroups analyzed under 7/0, resulting in the following three key subgroups:</p>
|
|
<p>(1) <i>Recipients in shared housing.</i> This group would be assessed a 10 percent <abbr class="spell">FBR</abbr> reduction under 10/5, compared with the 7 percent reduction under 7/0. The monthly benefit reductions for recipients in this group would be $63, on average, compared with $44 under 7/0 (see Table 3, columns 5 and 3, respectively).</p>
|
|
<p>(2) <i>Recipients with increases based on <abbr class="spell">ISM</abbr> elimination.</i> For the most part, this group is identical to that considered under 7/0, but the benefit increases are reduced somewhat ($147) because of the higher benefit reductions under 10/5 (see Table 3, column 4).</p>
|
|
<p>(3) <i>Recipients living alone.</i> This group, new under 10/5, comprises 27 percent of <abbr class="spell">SSI</abbr> recipients and has a poverty rate of 90 percent (Table 4, columns 1 and 2). Under 10/5, the group members would have a 5 percent increase in their <abbr class="spell">FBR</abbr>, yielding an average benefit increase of $38 per month (Table 3, column 4). Women and the elderly are disproportionately represented; in particular, women constitute 71 percent of this group (from unpublished tabulations).</p>
|
|
<p>Among recipients with increased benefits under 10/5, those living alone outnumber those receiving <abbr class="spell">ISM</abbr>—27 percent of recipients, compared with 7 percent (see Chart 6). Hence, recipients living alone dominate the overall findings for recipients with increased benefits under 10/5 (see Table 3, column 4). The number of recipients with increased benefits rises from 9 percent under 7/0, to 34 percent under 10/5 (Charts 5 and 6). Although total benefits redistributed under 10/5 are higher than under 7/0, the average increase is reduced by more than half, from $164 to $63 (Table 3, columns 2 and 4). The household per capita income and poverty rates of those with benefit increases under 10/5 differ considerably from those with increases under 7/0, reflecting the low incomes of recipients living alone (see Table 3, column 4). However, notwithstanding these findings for the combined subgroups with increased benefits, under 10/5 there is a redistribution of benefits from a lower-income group (those in shared housing) to a higher-income group (<abbr class="spell">ISM</abbr> recipients), just as there is under 7/0.</p>
|
|
<p><b>Poverty Effects.</b> Household poverty rates increase under both policy options—by 1.5 percentage points under 7/0 and by 2.2 percentage points under 10/5 (see Table 4, columns 3 and 4). However, the poverty gap measure registers substantial improvement in poverty under 10/5. To understand the poverty outcomes we must first consider the two poverty measures.</p>
|
|
<p>The poverty rate is the percentage of people whose incomes fall below the poverty threshold. Although the <abbr class="spell">FBR</abbr> is roughly equivalent to 70 percent of the poverty threshold for one person, we see <abbr class="spell">SSI</abbr> recipients with household incomes below 75 percent as well as above 300 percent of poverty. This is not surprising because <abbr class="spell">SSI</abbr> recipients live in a variety of household arrangements. In this analysis we compare household income with a household poverty threshold as a means of taking into account the economies of scale from sharing household expenses, such as the cost of rent, utilities, and food.</p>
|
|
<p>A shortcoming of the poverty rate is that it fails to capture effects for a household whose income changes, but for which those changes do not bring the household income to the poverty threshold. In this case, the household's financial situation may be improved or worsened, but the poverty rate measure does not register any effect. The poverty gap measure, often used as a complement to the poverty rate, is designed to capture such effects. The poverty gap is defined as the difference between the poverty threshold and the income level of a household or family. Hence the conventional aggregate poverty gap represents the amount of money required to bring the incomes of all families in poverty to the poverty threshold, eliminating poverty. Although the poverty rate would change only if a simulated income change takes household income to the level of the poverty threshold, the poverty gap is informative because any income increase for a household in poverty changes the poverty gap.</p>
|
|
<p>Looking at the number of households with incomes above and below the poverty threshold does not tell us about the distribution of recipient incomes, such as whether household incomes are substantially over or under the poverty threshold. This article also considers poverty distributions, which give a richer picture of the well-being of <abbr class="spell">SSI</abbr> households. Like the poverty gap measure, this also allows us to see changes not captured by the poverty rate.</p>
|
|
<p>In several ways, the poverty findings are not what we might have expected. Under the two options for benefit restructuring considered here, because of budget neutrality some groups would have benefit increases and others reductions, with the aggregate increases and reductions expected to be roughly equal. As a result, we might have expected little or no change in poverty. That said, poverty rate outcomes often depend on the proportion of families or households whose incomes are just above or just below the poverty threshold. We see evidence of such an effect for 7/0 (see Table 4), and we use bar graphs (Charts 7 and 8) to disaggregate the groups affected.</p>
|
|
<div class="chartCenter">
|
|
<div class="chart700" id="chart7">
|
|
<div class="title">Chart 7.<br><abbr class="spell">SSI</abbr> recipients whose benefits are increased under option 7/0: Poverty distribution before and after simulation</div>
|
|
<div class="scrollChart"><img src="v68n4p15_chart07.jpg" alt="Bar chart with tabular version below." width="700" height="347" /></div>
|
|
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
|
|
<table>
|
|
<caption><span class="tableNumber">Table equivalent for Chart 7. </span><abbr class="spell">SSI</abbr> recipients whose benefits are increased under option 7/0: Poverty distribution before and after simulation</caption>
|
|
<colgroup span="1" style="width:10em"></colgroup>
|
|
<colgroup span="2" style="width:8em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" rowspan="2" scope="colgroup">Household income<br>as a percentage<br>of poverty threshold</th>
|
|
<th class="spanner" colspan="2" scope="colgroup">Number of recipients</th>
|
|
</tr>
|
|
<tr>
|
|
<th scope="col">Before</th>
|
|
<th scope="col">After</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub0" scope="row">Under 100</th>
|
|
<td>167,881</td>
|
|
<td>153,027</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">101 to 200</th>
|
|
<td>182,533</td>
|
|
<td>169,512</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">201 to 300</th>
|
|
<td>80,766</td>
|
|
<td>101,945</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Over 300</th>
|
|
<td>181,099</td>
|
|
<td>187,793</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="noNotes" colspan="3"> </td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="firstNote">SOURCE: Social Security Administration's Financial Eligibility Model.</div>
|
|
<div class="lastNote">NOTE: <abbr class="spell">SSI</abbr> = Supplemental Security Income.</div>
|
|
</div>
|
|
</div>
|
|
<div class="chartCenter">
|
|
<div class="chart700" id="chart8">
|
|
<div class="title">Chart 8.<br><abbr class="spell">SSI</abbr> recipients whose benefits are reduced under option 7/0: Poverty distribution before and after simulation</div>
|
|
<div class="scrollChart"><img src="v68n4p15_chart08.jpg" alt="Bar chart with tabular version below." width="700" height="347" /></div>
|
|
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
|
|
<table>
|
|
<caption><span class="tableNumber">Table equivalent for Chart 8. </span><abbr class="spell">SSI</abbr> recipients whose benefits are reduced under option 7/0: Poverty distribution before and after simulation</caption>
|
|
<colgroup span="1" style="width:10em"></colgroup>
|
|
<colgroup span="2" style="width:8em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" rowspan="2" scope="colgroup">Household income<br>as a percentage<br>of poverty threshold</th>
|
|
<th class="spanner" colspan="2" scope="colgroup">Number of recipients</th>
|
|
</tr>
|
|
<tr>
|
|
<th scope="col">Before</th>
|
|
<th scope="col">After</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub0" scope="row">Under 100</th>
|
|
<td>703,970</td>
|
|
<td>772,700</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">101 to 200</th>
|
|
<td>1,201,914</td>
|
|
<td>1,155,041</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">201 to 300</th>
|
|
<td>411,447</td>
|
|
<td>398,944</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Over 300</th>
|
|
<td>334,761</td>
|
|
<td>325,414</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="noNotes" colspan="3"> </td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="firstNote">SOURCE: Social Security Administration's Financial Eligibility Model.</div>
|
|
<div class="lastNote">NOTE: <abbr class="spell">SSI</abbr> = Supplemental Security Income</div>
|
|
</div>
|
|
</div>
|
|
<p>Under 7/0, recipients with reduced benefits outnumber those with increased benefits, 41 percent to 9 percent (Chart 5). This difference in the size of the groups, combined with how the groups are distributed above and below the poverty threshold, accounts for the poverty outcomes that we observe. As shown above, those with benefit increases under 7/0 have high incomes relative to other <abbr class="spell">SSI</abbr> recipients—over 70 percent have incomes above the poverty threshold (see Table 3 and Charts 7 and 8). By implication, because of their small numbers and because the majority of them have incomes above the poverty threshold (see Chart 7), their benefit increases have limited impact on the poverty rate. The poverty outcomes, then, mainly reflect the income changes of those with benefit reductions. Over 40 percent of recipients with benefit reductions have incomes just above the poverty threshold, in the 101 percent to 200 percent bracket (see Chart 8). Chart 8 shows that those with benefit reductions appear along a broad segment of the income distribution scale. There is a general shift downward, and enough of those just above the threshold fall into poverty—moving from just above the threshold to just below—to account for the overall poverty rate increase of 1.5 percentage points (see Chart 9 and Table 4). Hence, because those with benefit increases have higher household incomes than those with reductions, benefit restructuring, although well-suited to simplifying <abbr class="spell">ISM</abbr>, is poorly designed for reducing poverty.<sup><a href="#mn19" id="mt19">19</a></sup></p>
|
|
<div class="chartCenter">
|
|
<div class="chart700" id="chart9">
|
|
<div class="title">Chart 9.<br>Combining <abbr class="spell">SSI</abbr> recipients whose benefits are increased and reduced under option 7/0: Poverty distribution before and after simulation</div>
|
|
<div class="scrollChart"><img src="v68n4p15_chart09.jpg" alt="Bar chart with tabular version below." width="700" height="348" /></div>
|
|
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
|
|
<table>
|
|
<caption><span class="tableNumber">Table equivalent for Chart 9. </span>Combining <abbr class="spell">SSI</abbr> recipients whose benefits are increased and reduced under option 7/0: Poverty distribution before and after simulation</caption>
|
|
<colgroup span="1" style="width:10em"></colgroup>
|
|
<colgroup span="2" style="width:8em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" rowspan="2" scope="colgroup">Household income<br>as a percentage<br>of poverty threshold</th>
|
|
<th class="spanner" colspan="2" scope="colgroup">Number of recipients</th>
|
|
</tr>
|
|
<tr>
|
|
<th scope="col">Before</th>
|
|
<th scope="col">After</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub0" scope="row">Under 100</th>
|
|
<td>871,854</td>
|
|
<td>925,724</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">101 to 200</th>
|
|
<td>1,384,447</td>
|
|
<td>1,324,553</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">201 to 300</th>
|
|
<td>492,212</td>
|
|
<td>500,888</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Over 300</th>
|
|
<td>515,860</td>
|
|
<td>513,207</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="noNotes" colspan="3"> </td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="firstNote">SOURCE: Social Security Administration's Financial Eligibility Model.</div>
|
|
<div class="lastNote">NOTE: <abbr class="spell">SSI</abbr> = Supplemental Security Income</div>
|
|
</div>
|
|
</div>
|
|
<p>The poverty outcomes for 10/5 are counterintuitive: Why would poverty rates increase by 2.2 percentage points if benefits are increased both for recipients receiving <abbr class="spell">ISM</abbr> (Chart 10) as well as for recipients living alone, a subgroup with a 90 percent poverty rate (see Chart 11 and Table 4)? There are two reasons. First, under 10/5 those in shared housing have a 10 percent reduction in the <abbr class="spell">SSI</abbr> income guarantee, resulting in a 2.9 percentage-point increase in poverty for a group that includes almost half of all <abbr class="spell">SSI</abbr> recipients (see Table 4 and Chart 12). Second, although those living without other adults have a 2.5 percentage-point reduction in poverty, more detailed estimates show that many in this group have incomes well below the poverty threshold; hence, while a 5 percent increase in the <abbr class="spell">FBR</abbr> makes them better off, it does not bring many of them out of poverty. We confirmed this from unpublished tabulations showing a 12 percent reduction for those with incomes at or below 75 percent of the poverty threshold. Although the effect on the poverty rate is modest, the poverty gap measure registers the improvement. Under 10/5 the poverty gap is reduced by 2.7 percent, and for those living alone it is reduced by 18 percent (see Table 4). The 10/5 proposal links benefit increases related to benefit restructuring to separate increases for those living alone, but unpublished tabulations show stark differences between the two types of benefit increases with respect to their effectiveness in reducing poverty. Specifically, 87 percent of those with benefit increases related to <abbr class="spell">ISM</abbr> elimination are <i>nonpoor</i> (see Chart 10). Conversely, under the 5 percent <abbr class="spell">FBR</abbr> increase for those living alone, 87 percent of those with benefit increases are <i>poor</i> (compare Charts 10 and 11). Chart 13 shows the net effect of 10/5.</p>
|
|
<div class="chartCenter">
|
|
<div class="chart700" id="chart10">
|
|
<div class="title">Chart 10.<br><abbr class="spell">SSI</abbr> recipients whose benefits are increased (charged with <abbr class="spell">ISM</abbr>) under option 10/5: Poverty distribution before and after simulation</div>
|
|
<div class="scrollChart"><img src="v68n4p15_chart10.jpg" alt="Bar chart with tabular version below." width="700" height="346" /></div>
|
|
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
|
|
<table>
|
|
<caption><span class="tableNumber">Table equivalent for Chart 10. </span><abbr class="spell">SSI</abbr> recipients whose benefits are increased (charged with ISM) under option 10/5: Poverty distribution before and after simulation</caption>
|
|
<colgroup span="1" style="width:10em"></colgroup>
|
|
<colgroup span="2" style="width:8em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" rowspan="2" scope="colgroup">Household income<br>as a percentage<br>of poverty threshold</th>
|
|
<th class="spanner" colspan="2" scope="colgroup">Number of recipients</th>
|
|
</tr>
|
|
<tr>
|
|
<th scope="col">Before</th>
|
|
<th scope="col">After</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub0" scope="row">Under 100</th>
|
|
<td>92,327</td>
|
|
<td>86,202</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">101 to 200</th>
|
|
<td>178,293</td>
|
|
<td>156,545</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">201 to 300</th>
|
|
<td>80,765</td>
|
|
<td>104,187</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Over 300</th>
|
|
<td>181,103</td>
|
|
<td>185,553</td>
|
|
</tr>
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</tbody>
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<tfoot>
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<tr>
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<td class="noNotes" colspan="3"> </td>
|
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</tr>
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</tfoot>
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</table>
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</div>
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<div class="firstNote">SOURCE: Social Security Administration's Financial Eligibility Model.</div>
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|
<div class="lastNote">NOTE: <abbr class="spell">SSI</abbr> = Supplemental Security Income; <abbr class="spell">ISM</abbr> = in-kind support and maintenance.</div>
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</div>
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</div>
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<div class="chartCenter">
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<div class="chart700" id="chart11">
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<div class="title">Chart 11.<br><abbr class="spell">SSI</abbr> recipients whose benefits are increased (living alone) under option 10/5: Poverty distribution before and after simulation</div>
|
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<div class="scrollChart"><img src="v68n4p15_chart11.jpg" alt="Bar chart with tabular version below." width="700" height="365" /></div>
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<div class="table altTable"><a class="altToggle" href="">Show as table</a>
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<table>
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<caption><span class="tableNumber">Table equivalent for Chart 11. </span><abbr class="spell">SSI</abbr> recipients whose benefits are increased (living alone) under option 10/5: Poverty distribution before and after simulation</caption>
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<colgroup span="1" style="width:10em"></colgroup>
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<colgroup span="2" style="width:8em"></colgroup>
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<thead>
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<tr>
|
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<th class="stubHeading" rowspan="2" scope="colgroup">Household income<br>as a percentage<br>of poverty threshold</th>
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<th class="spanner" colspan="2" scope="colgroup">Number of recipients</th>
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</tr>
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<tr>
|
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<th scope="col">Before</th>
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<th scope="col">After</th>
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</tr>
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</thead>
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<tbody>
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<tr>
|
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<th class="stub0" scope="row">Under 100</th>
|
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<td>1,660,718</td>
|
|
<td>1,610,207</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">101 to 200</th>
|
|
<td>182,125</td>
|
|
<td>232,604</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">201 to 300</th>
|
|
<td>7,136</td>
|
|
<td>7,136</td>
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|
</tr>
|
|
<tr>
|
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<th class="stub0" scope="row">Over 300</th>
|
|
<td>0</td>
|
|
<td>0</td>
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</tr>
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</tbody>
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|
<tfoot>
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<tr>
|
|
<td class="noNotes" colspan="3"> </td>
|
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</tr>
|
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</tfoot>
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</table>
|
|
</div>
|
|
<div class="firstNote">SOURCE: Social Security Administration's Financial Eligibility Model.</div>
|
|
<div class="lastNote">NOTE: <abbr class="spell">SSI</abbr> = Supplemental Security Income.</div>
|
|
</div>
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|
</div>
|
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<div class="chartCenter">
|
|
<div class="chart700" id="chart12">
|
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<div class="title">Chart 12.<br><abbr class="spell">SSI</abbr> recipients whose benefits are reduced under option 10/5: Poverty distribution before and after simulation</div>
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<div class="scrollChart"><img src="v68n4p15_chart12.jpg" alt="Bar chart with tabular version below." width="700" height="365" /></div>
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<div class="table altTable"><a class="altToggle" href="">Show as table</a>
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<table>
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<caption><span class="tableNumber">Table equivalent for Chart 12. </span><abbr class="spell">SSI</abbr> recipients whose benefits are reduced under option 10/5: Poverty distribution before and after simulation</caption>
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<colgroup span="1" style="width:10em"></colgroup>
|
|
<colgroup span="2" style="width:8em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" rowspan="2" scope="colgroup">Household income<br>as a percentage<br>of poverty threshold</th>
|
|
<th class="spanner" colspan="2" scope="colgroup">Number of recipients</th>
|
|
</tr>
|
|
<tr>
|
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<th scope="col">Before</th>
|
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<th scope="col">After</th>
|
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</tr>
|
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</thead>
|
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<tbody>
|
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<tr>
|
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<th class="stub0" scope="row">Under 100</th>
|
|
<td>666,598</td>
|
|
<td>787,282</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">101 to 200</th>
|
|
<td>1,166,715</td>
|
|
<td>1,069,461</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">201 to 300</th>
|
|
<td>404,503</td>
|
|
<td>390,179</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Over 300</th>
|
|
<td>320,434</td>
|
|
<td>311,329</td>
|
|
</tr>
|
|
</tbody>
|
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<tfoot>
|
|
<tr>
|
|
<td class="noNotes" colspan="3"> </td>
|
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</tr>
|
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</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="firstNote">SOURCE: Social Security Administration's Financial Eligibility Model.</div>
|
|
<div class="lastNote">NOTE: <abbr class="spell">SSI</abbr> = Supplemental Security Income.</div>
|
|
</div>
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|
</div>
|
|
<div class="chartCenter">
|
|
<div class="chart700" id="chart13">
|
|
<div class="title">Chart 13.<br>Combining <abbr class="spell">SSI</abbr> recipients whose benefits are increased and reduced under option 10/5: Poverty distribution before and after simulation</div>
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<div class="scrollChart"><img src="v68n4p15_chart13.jpg" alt="Bar chart with tabular version below." width="700" height="366" /></div>
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<div class="table altTable"><a class="altToggle" href="">Show as table</a>
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<table>
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<caption><span class="tableNumber">Table equivalent for Chart 13. </span>Combining <abbr class="spell">SSI</abbr> recipients whose benefits are increased and reduced under option 10/5: Poverty distribution before and after simulation</caption>
|
|
<colgroup span="1" style="width:10em"></colgroup>
|
|
<colgroup span="2" style="width:8em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" rowspan="2" scope="colgroup">Household income<br>as a percentage<br>of poverty threshold</th>
|
|
<th class="spanner" colspan="2" scope="colgroup">Number of recipients</th>
|
|
</tr>
|
|
<tr>
|
|
<th scope="col">Before</th>
|
|
<th scope="col">After</th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub0" scope="row">Under 100</th>
|
|
<td>2,419,643</td>
|
|
<td>2,483,691</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">101 to 200</th>
|
|
<td>1,527,132</td>
|
|
<td>1,458,610</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">201 to 300</th>
|
|
<td>492,404</td>
|
|
<td>501,502</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="row">Over 300</th>
|
|
<td>501,537</td>
|
|
<td>496,882</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="noNotes" colspan="3"> </td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="firstNote">SOURCE: Social Security Administration's Financial Eligibility Model.</div>
|
|
<div class="lastNote">NOTE: <abbr class="spell">SSI</abbr> = Supplemental Security Income.</div>
|
|
</div>
|
|
</div>
|
|
<p>The poverty effects vary by subgroup, especially for living arrangement groups (see Table 4).<sup><a href="#mn20" id="mt20">20</a></sup> As mentioned above, under 7/0 adult recipients living with adults other than eligible spouses (49 percent of all recipients) would have an increase in the poverty rate of 1.5 percentage points and an increase in their poverty gap of 7.3 percent. Under 10/5, the poverty gap would be reduced by 18 percent for adults living without other adults in their households—the group benefiting from a 5 percent increase in the <abbr class="spell">FBR</abbr>. But the largest group—adult recipients living with other adults and subject to the 10 percent reduction—would experience an increase in poverty. The poverty rate for this group would increase by 2.9 percentage points and the poverty gap would increase by 13.9 percent. Under 10/5, elderly and female recipients would have marked reductions in the poverty gap because they are overrepresented among those with <abbr class="spell">FBR</abbr> increases (those living without other adults) and underrepresented among those with reductions (especially those living with other adults).</p>
|
|
<h2>Conclusion</h2>
|
|
<p>The <abbr class="spell">ISM</abbr> and living arrangement policies now in place are highly complex, requiring program administrators to establish living arrangement categories for all recipients and receipt of <abbr class="spell">ISM</abbr> for most recipients. This implies detailed tracking of household expenses, the recipient's contribution to household expenses, and how the recipient's contribution is earmarked within the household budget. By contrast, under benefit restructuring, program administrators would avoid the minutiae of household budgeting altogether—by simply establishing whether the recipient lives with another adult. If so, administrators would compute benefits using a reduced <abbr class="spell">FBR</abbr>; otherwise, they would use the full <abbr class="spell">FBR</abbr>.</p>
|
|
<p>Current policy and the alternative analyzed here—benefit restructuring—have distinct rationales. Under current policy, benefits are reduced to partially offset the receipt of <abbr class="spell">ISM</abbr> for about 9 percent of recipients, reflecting a fundamental program equity goal. By contrast, under benefit restructuring there would be no benefit reductions for those receiving <span class="nobr">in-kind</span> support from family or friends. However, to recoup the higher benefits paid to those now receiving <abbr class="spell">ISM</abbr>, recipients who share housing—roughly half of all recipients—would be assessed benefit reductions. These reductions would target adults who share housing, on grounds that they are better off than most recipients because of economies of scale in housing, utilities, and food.</p>
|
|
<p>For both current policy and benefit restructuring, incentive effects follow from how the benefit reductions are targeted. Current policy probably discourages <span class="nobr">in-kind</span> contributions, especially for those who might make smaller contributions because such contributions trigger a dollar-for-dollar benefit reduction. Benefit restructuring would undo such disincentives, encouraging <span class="nobr">in-kind</span> contributions. In addition, current policy may provide a disincentive to share housing for <abbr class="spell">SSI</abbr> recipients faced with the <span class="nobr">one-third</span> reduction. Analogously, benefit restructuring may create a disincentive to share housing for those subject to a reduced <abbr class="spell">FBR</abbr>.</p>
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|
<p>The effects of eliminating <abbr class="spell">ISM</abbr>-related benefit reductions can be disentangled from the effects of recouping revenues from those who share housing. Eliminating <abbr class="spell">ISM</abbr>, taken alone, would simplify program administration (saving about $70 million per year), encourage contributions to recipients, and substantially increase benefits for recipients currently receiving contributions of food or shelter—but at a cost of roughly $1.2 billion annually. Because of budget neutrality, those costs must be recouped and, under benefit restructuring, they are recouped through benefit reductions to recipients who share housing. One concern is that this large-scale redistribution—affecting $1.2 billion of annual benefits and 50 percent to 75 percent of all recipients—may be considered disproportionate to the $70 million annual cost of administering <abbr class="spell">ISM</abbr>.</p>
|
|
<p>Yet another concern is the broad redistributional and poverty outcomes of benefit restructuring. Under 7/0—benefit restructuring in its purest form—the 9 percent of recipients with <abbr class="spell">ISM</abbr> would have benefit increases averaging 44 percent, or $164 per month. The associated program costs would be offset by a 9 percent average benefit reduction ($44 per month) for 41 percent of all recipients—those who share housing. And, because a higher percentage of the disabled share housing than do the aged, disabled adults would bear a somewhat disproportionate share of the benefit reductions. Furthermore, although both those with benefit increases and benefit reductions have lower poverty rates than the average <abbr class="spell">SSI</abbr> recipient, we find that—even before any changes in benefits—the household incomes of those with benefit increases would be 42 percent higher than the household incomes of recipients with benefit reductions. In addition, there are increases in poverty under both the 7/0 option (1.5 percentage points) and the 10/5 option (2.2 percentage points), and under 7/0, the great majority of those with benefit increases would be nonpoor. Hence, the broad distributional outcomes for benefit restructuring are not consistent with the underlying distributional objective of <abbr class="spell">SSI</abbr>—to provide more assistance to those most in need.</p>
|
|
<p>A special provision under 10/5 does reduce poverty for a key subgroup, closing the poverty gap for individuals living alone or with minor children. This group comprises 27 percent of all <abbr class="spell">SSI</abbr> recipients, disproportionately women and the elderly, and it has an initial poverty rate of 90 percent. Although this provision does not contribute to <abbr class="spell">ISM</abbr> simplification, it reduces poverty quite efficiently. But, one might ask whether it is equitable that recipients in shared housing should bear its cost.</p>
|
|
<p>How can we simplify current <abbr class="spell">ISM</abbr> and living arrangement policies, but avoid the redistributional and poverty outcomes reported here? Accepting budget neutrality as a given probably implies dropping total elimination of <abbr class="spell">ISM</abbr> as a policy option. Instead, future research might consider incremental reforms of current <abbr class="spell">ISM</abbr> policy that do not entail large-scale redistribution of benefits.</p>
|
|
<h2>Appendix: Simulation Methodology</h2>
|
|
<p>The simulation results are derived from the Financial Eligibility Model (<abbr class="spell">FEM</abbr>)—a static simulation model developed by the Office of Policy (currently the Office of Retirement and Disability Policy) staff and used in several previous studies (see Wixon and Vaughan (1991); Davies and others (2001/2002); Rupp, Strand, and Davies (2003); and Davies, Rupp, and Strand (2004)). The <abbr class="spell">FEM</abbr> has undergone substantial enhancement in order to address the subject of this Supplemental Security Income (<abbr class="spell">SSI</abbr>) benefit restructuring study. The Social Security Administration (<abbr class="spell">SSA</abbr>) beneficiary data from the Revised Management Information Counts System (<abbr class="spell">REMICS</abbr>) have been added to the <abbr class="spell">FEM</abbr>. Linking these administrative records with survey data allows researchers to identify those receiving <span class="nobr">in-kind</span> support and maintenance (<abbr class="spell">ISM</abbr>) and the amounts received. Potential <abbr class="spell">ISM</abbr> status is then imputed via a hot deck process to a portion of the nonparticipants who could be eligible for <abbr class="spell">SSI</abbr> under any of the reform scenarios.</p>
|
|
<p>A static simulation model is designed to assess changes in the size and characteristics of the recipient population that might reasonably be anticipated to occur as a result of specific changes in program parameters. The model allows people to enter the rolls if they become newly eligible or if their potential benefit amounts increase. Similarly, people leave the rolls if they lose eligibility, and they may leave if their benefits decrease. The simulations assume that <i>only</i> changes in specific program parameters affect outcomes and that all of the changes occur instantaneously. In other words, the model holds constant <abbr class="spell">SSA</abbr> policies (other than the policy parameters altered by any given policy scenario) and the characteristics of the target population, and it reflects full implementation of and complete adjustment to the reform scenario by <abbr class="spell">SSA</abbr> staff and by potential and actual recipients. The model assumes that the behavior of the target population and the way in which <abbr class="spell">SSA</abbr> staff administer the program do not change except in response to changes in program eligibility and benefit levels. These are restrictive assumptions, but also very useful ones in that they help focus on the likely implications of the proposed reforms rather than other changes over time in recipient characteristics and behavior, as well as program operations.</p>
|
|
<p>The <abbr class="spell">FEM</abbr> is based on the Survey of Income and Program Participation (<abbr>SIPP</abbr>) exact matched to <abbr class="spell">SSA</abbr> administrative records using Social Security numbers reported by survey respondents. The survey estimates reflect the noninstitutional population of the United States, and all data represent the reference month of November 1996. The Supplemental Security Record data are the source of information on current-pay status and monthly federal benefits for participants. Whether <abbr class="spell">ISM</abbr> is received and the degree to which benefits are reduced for <abbr class="spell">ISM</abbr> are taken from the <abbr class="spell">REMICS</abbr>. All of the estimates are weighted to reflect the underlying study universe of people. The <abbr class="spell">FEM</abbr> produces percentage differences in <abbr class="spell">SSI</abbr> enrollment between a given proposal and the <i>status quo</i>. These percentages are then applied to actual or projected <abbr class="spell">SSI</abbr> enrollments to generate changes in <abbr class="spell">SSI</abbr> rolls associated with the proposal. In this study, estimated percentage changes in <abbr class="spell">SSI</abbr> enrollment were applied to the December 2005 <abbr class="spell">SSI</abbr> population for the age categories represented here: 0 to 17, 18 to 64, and 65 or older. This allows the policymaker to obtain a reasonably accurate sense of the changes that would have occurred in December 2005 as a result of full implementation of a proposed policy change.</p>
|
|
<p>A key component of the <abbr class="spell">FEM</abbr> is the <abbr class="spell">SSI</abbr> benefit calculator. Calculated benefits are based on <abbr>SIPP</abbr>-reported earned and unearned income and other characteristics related to the <abbr class="spell">SSI</abbr> eligibility determination. The benefit calculator uses program parameters and rules to calculate an expected federal <abbr class="spell">SSI</abbr> benefit amount. Those sample members with positive calculated federal benefits are deemed payment eligible. If payment-eligible individuals participate in <abbr class="spell">SSI</abbr>, they are presumed to receive any state supplements that would be available to them as well as the federal benefits calculated from the <abbr>SIPP</abbr> source data. The calculated payment, eligibility status, and potential (or expected) monthly federal benefit are available for all members of the relevant <abbr>SIPP</abbr> sample, whether the sample member actually participated in the program or not. This is important because not all <abbr class="spell">SSI</abbr> eligibles choose to enroll in the program, and also because payment eligibility and expected federal payment amounts may change as a result of simulated changes. For each simulation, the benefit calculator estimates eligibility and federal benefits under two scenarios: (1) the "baseline scenario," reflecting status quo program rules, and (2) a "simulation scenario," reflecting hypothetical changes in program rules. For example, a simulation scenario may eliminate <abbr class="spell">ISM</abbr> and increase or decrease the federal benefit rate (<abbr class="spell">FBR</abbr>) for specific classes of potential recipients by a predetermined percent value. Finally, the relevant differences between the baseline scenario and the simulation scenario are calculated, and all simulation outcomes of interest (such as household income and poverty status) are recalculated to reflect simulated changes in participation status and monthly federal benefits.</p>
|
|
<p>Because not all eligibles participate under current conditions, it is reasonable to assume that the same is true for the simulation scenario. Participation status may change as a result of changes in eligibility status, financial incentives, and possibly other factors such as stigma. The model predicts participation separately for elderly and disabled adults using a multivariate model (probit equation) that posits that participation is a function of various recipient characteristics, environmental factors, and financial incentives arising from the dollar value of expected benefits. It is assumed that, other things equal, participation is more likely if expected federal <abbr class="spell">SSI</abbr> benefits are relatively high. The parameters from the model that was estimated using baseline conditions are then applied to the pool of eligibles and the value of the independent variables under the simulation scenario. By construction, all variables other than expected <abbr class="spell">SSI</abbr> benefits (and by implication, payment eligibility status) are presumed to equal baseline conditions. Importantly, the model does not presume that the rate of participation is unchanged between the baseline and simulation scenarios, but allows the probability and overall rate of participation to vary in response to changes in expected benefits between the two scenarios. Note that expected benefits for some adults may increase (as a result of the elimination of <abbr class="spell">ISM</abbr> and increased <abbr class="spell">FBR</abbr> for some), although they may decrease for others (as a result of a simulated <abbr class="spell">FBR</abbr> reduction not sufficiently counterbalanced by the elimination of <abbr class="spell">ISM</abbr>, to maintain or increase baseline benefits). The simulations reflect the net result of <abbr class="spell">ISM</abbr> and <abbr class="spell">FBR</abbr> changes.</p>
|
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<p>In order to receive <abbr class="spell">SSI</abbr>, individuals must meet categorical eligibility requirements by either being blind, disabled, or older than age 65. Although it would be difficult to determine precisely which unenrolled individuals meet <abbr class="spell">SSA</abbr> disability standards, this sort of determination is generally not necessary for a participation model. Rather, participation is estimated directly as a function of financial and disability-related characteristics. It turns out that the eligible spouse category is dominated by elderly couples, whose categorical eligibility is not in question. However, the identification of adult recipients living with ineligible spouses younger than age 65 is questionable and can be estimated only with substantial measurement error. Adults with ineligible spouses also form the smallest of the living arrangement categories identified in this analysis. For these two reasons combined, no detailed results are presented for this subgroup.</p>
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|
<p>Calculations for deeming the income of an ineligible spouse would change as a result of changes to the benefit rate under benefit restructuring. An <abbr class="spell">SSI</abbr> applicant or recipient with an ineligible spouse must qualify on the basis of his or her own income before any deeming of the spouse's income is considered. If the ineligible spouse's income is less than the difference between the individual and couple <abbr class="spell">FBR</abbr>, there is no income to deem and the eligible individual's own income is subtracted from the individual <abbr class="spell">FBR</abbr> to determine the benefit amount (calculation 1). If the ineligible spouse's income is greater than the difference between the two benefit rates, the eligible individual and ineligible spouse are treated as an eligible couple for purposes of counting income (calculation 2). Before incomes are combined, an allocation for each ineligible child equal to the difference between the <abbr class="spell">FBR</abbr> for a couple and the <abbr class="spell">FBR</abbr> for an individual is subtracted from the ineligible spouse's income. The basis for this allocation would not change under benefit restructuring. All of the options would use the reduced <abbr class="spell">FBR</abbr> for an individual living with another adult in the first calculation.</p>
|
|
<p>Modeling participation among eligible children is a technically difficult objective that has not been achieved to date. Instead, we begin with the observed pool of child recipients and assume that changes to this group will be similar to those estimated for adults. For each simulation scenario, we calculate the factor by which the recipient population changes for unmarried adults living with other adults, and we apply this same factor to the recipient population for children. Because the proposed reforms do not change the <abbr class="spell">FBR</abbr> for children, results presented in this study are not substantially affected by this assumption. Nevertheless, a limitation of our approach is that we do not estimate the characteristics of children who would become newly eligible as a result of the elimination of <abbr class="spell">ISM</abbr>.</p>
|
|
<p>In the current simulation exercise, <abbr class="spell">FBR</abbr> reductions were chosen to avoid increasing simulated <abbr class="spell">SSI</abbr> program costs under full implementation. For example, the 7/0 option is presented because 7 is the smallest whole percentage-point <abbr class="spell">FBR</abbr> reduction for adults that covers the cost to <abbr class="spell">SSI</abbr> of eliminating <abbr class="spell">ISM</abbr>-related benefit reductions, according to the <abbr class="spell">FEM</abbr>. Because only whole percentage-point <abbr class="spell">FBR</abbr> reductions are considered, we would actually expect some very minor long-term <abbr class="spell">SSI</abbr> savings for the proposed reforms. The <abbr class="spell">FEM</abbr> does not consider administrative costs or savings, nor does it capture costs or savings to other programs such as Medicaid.</p>
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<div id="notes">
|
|
<h2>Notes</h2>
|
|
<p> <a href="#mt1" id="mn1">1</a> In this analysis we use "income guarantee" and "<abbr class="spell">FBR</abbr>" interchangeably.</p>
|
|
<p> <a href="#mt2" id="mn2">2</a> As of 2004, 47 states and the District of Columbia supplement the federal <abbr class="spell">SSI</abbr> payment. The amount of state supplementation varies by the living arrangement of the recipient and by state. In fact, six states (California, Massachusetts, New York, North Carolina, Pennsylvania, and Wisconsin) account for 84 percent of all supplement dollars paid.</p>
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<p> <a href="#mt3" id="mn3">3</a> Because the <abbr class="spell">SSI</abbr> benefit is included in household income when calculating the amount of food stamps for a household, an increase or decrease in the <abbr class="spell">SSI</abbr> payment would generate a countervailing effect on the Food Stamp Program (<abbr class="spell">FSP</abbr>) grant for those receiving food stamps. <abbr class="spell">FSP</abbr> changes would offset about 30 percent of the change in <abbr class="spell">SSI</abbr> benefits.</p>
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<p> <a href="#mt4" id="mn4">4</a> This article uses a household poverty measure, rather than the conventional family based poverty measure. The family based measure may be biased in the following respect. In some cases an <abbr class="spell">SSI</abbr> recipient may reside with an unrelated person, enjoying economies of scale with respect to costs of shelter and utilities. Current policies for counting <abbr class="spell">ISM</abbr> do not distinguish between households of unrelated persons and family households. Using a family based measure implies that the poverty threshold used in calculating poverty for the <abbr class="spell">SSI</abbr> recipient or couple will not reflect such economies of scale (because the recipient and roommate are unrelated) and the resulting poverty estimates may be too high. By contrast, using a household-based measure would capture the effects of such economies, resulting in lower poverty rates. In fact, for the largest household composition category used in this analysis—adults living with other adults—using a household measure of poverty reduced poverty rates in our sample from 38 percent to 24 percent. However, there is also good reason to believe that a household-based measure yields poverty estimates that are too low. The household-based measure assumes that the income of all household members is equally available to meet the needs of all household members, that is, there is full sharing of income. In this respect, the household measure is not consistent with the conventional family measure that assumes family members share income, but unrelated persons do not. Also, using the household-based measure makes it problematic to compare poverty estimates from this analysis with conventional poverty estimates.</p>
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<p> <a href="#mt5" id="mn5">5</a> <i>Report of the Committee on Finance</i>, United States Senate, to accompany <abbr>H.R.</abbr> 1, September 26, 1972.</p>
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<p> <a href="#mt6" id="mn6">6</a> If the recipient has no other income, the first $20 of <abbr class="spell">ISM</abbr> received under the <abbr class="spell">PMV</abbr> may be excluded using the general income exclusion. The examples that follow assume that the recipient has other unearned income, so the $20 exclusion would not be available to offset any <abbr class="spell">ISM</abbr> received.</p>
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<p> <a href="#mt7" id="mn7">7</a> The $20 general income exclusion may be applied to earnings (raising the initial exclusion to $85) provided the recipient does not have unearned income to which the exclusion would be applied.</p>
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<p> <a href="#mt8" id="mn8">8</a> Cost estimates are for 2007, based on unpublished estimates by <abbr class="spell">SSA</abbr>'s Office of the Chief Actuary, dated October 31, 2005.</p>
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<p> <a href="#mt9" id="mn9">9</a> Final regulations were published on February 7, 2005.</p>
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<p><a href="#mt10" id="mn10">10</a> The benefit reductions would not extend to eligible couples, on grounds that the benefit for such couples currently reflects economies of scale from shared housing. Eligible couples receive benefits based on 150 percent of the individual-guarantee level, rather than 200 percent.</p>
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<p><a href="#mt11" id="mn11">11</a> Costs could increase if an implementation strategy is used, for example, to protect the benefits of current recipients. No implementation strategies are simulated in this analysis, nor are Medicaid cost increases factored into the cost estimates.</p>
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<p><a href="#mt12" id="mn12">12</a> A simpler process is used for institutionalized applicants.</p>
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<p><a href="#mt13" id="mn13">13</a> Office of Budget estimate, May 4, 2006.</p>
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<p><a href="#mt14" id="mn14">14</a> <abbr class="spell">SSI</abbr> recipients can receive large <abbr class="spell">ISM</abbr> contributions under current policy. That would not change under the options analyzed here. For example, policymakers should be aware that under both current policies and the options being considered, parents could maintain an adult child receiving <abbr class="spell">SSI</abbr> in a high rent apartment, paying the rent, food, and utilities. That said, the new options would clearly encourage additional contributions of food or shelter, especially contributions of modest amounts.</p>
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<p><a href="#mt15" id="mn15">15</a> Chart 6 shows that 7 percent of recipients have <abbr class="spell">ISM</abbr>, rather than the 9 percent shown in Chart 5. This difference mainly reflects a number of recipients who live alone and receive <abbr class="spell">ISM</abbr>. In chart 1, those individuals are included in the <abbr class="spell">ISM</abbr> group, and in chart 6 they are classified as living alone.</p>
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<p><a href="#mt16" id="mn16">16</a> In some cases, those exiting or entering the program may have low <abbr class="spell">SSI</abbr> benefits, but their Medicaid benefits make them a key subgroup in terms of budgetary effects. This analysis does not take into account Medicaid costs.</p>
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<p><a href="#mt17" id="mn17">17</a> We classify affected groups by the net effect of the policy options—whether the recipient's total benefit is increased or reduced.</p>
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<p><a href="#mt18" id="mn18">18</a> Furthermore, for disabled adults with benefit increases, the initial household income is over 50 percent greater than for those with benefit decreases (from unpublished tabulations).</p>
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<p><a href="#mt19" id="mn19">19</a> Note that recipients in extreme poverty—with incomes less than 50 percent of the poverty threshold—increase by over 50 percent under both options. Many of these recipients appear to be living with other adults who have little or no income and, under benefit restructuring, their benefits would be reduced. Although such recipients comprise only a fraction of those affected by benefit restructuring (3 percent under option 7/0), they gain nothing from the economies of scale from sharing housing because their roommates are indigent.</p>
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<p><a href="#mt20" id="mn20">20</a> Stark differences for living arrangement groups are not surprising. Under both proposals, benefit increases and reductions are targeted explicitly by living arrangement.</p>
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</div>
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<div id="references">
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<h2>References</h2>
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<p>Davies, Paul S., Minh Huynh, Chad Newcomb, Paul <span class="nobr">O'Leary,</span> Kalman Rupp, and Jim Sears. 2001/2002. Modeling <abbr class="spell">SSI</abbr> financial eligibility and simulating the effect of policy options. <i>Social Security Bulletin</i> 64(2): <span class="nobr">16–45.</span></p>
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<p>Davies, Paul S., Kalman Rupp, and Alexander Strand. 2004. The potential of the Supplemental Security Income program to reduce poverty among the elderly. <i>Journal of Aging and Social Policy</i> 16(1): <span class="nobr">21–42.</span></p>
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<p>[<abbr class="spell">GAO</abbr>] Government Accountability Office. 2002. <i>Supplemental Security Income: Progress made in detecting and recovering overpayments, but management attention should continue</i>. Report <abbr title="number">No.</abbr> <abbr class="spell">GAO</abbr>-02-849 (September).</p>
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<p>Rupp, Kalman, Alexander Strand, and Paul Davies. 2003. Poverty among elderly women: Assessing <abbr class="spell">SSI</abbr> options to strengthen Social Security reform. <i>Journal of Gerontology: Social Sciences</i> 58B(6): <span class="nobr">S359–S368.</span></p>
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<p>[<abbr class="spell">SSA</abbr>] Social Security Administration. 2000. <i>Simplifying the Supplemental Security Income program: Challenges and opportunities.</i> <abbr class="spell">SSA</abbr> <abbr title="Publication">Pub.</abbr> <abbr title="number">No.</abbr> 13-005. Office of Policy<i>.</i></p>
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<p>————. 2005. <i>Annual report of the Supplemental Security Income program</i>. Social Security Advisory Board statement on the Supplemental Security Income program. Office of the Chief Actuary (October).</p>
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<p>————. 2007a. <i>Payment accuracy (stewardship) report: Supplemental Security Income, fiscal year 2006</i>. Office of Quality Performance (September).</p>
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<p>————. 2007b. <i><abbr class="spell">SSI</abbr> annual statistical report, 2006. </i>Office of Policy. Office of Research, Evaluation and Statistics.</p>
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<p>————. 2008. <i>Characteristics of noninstitutionalized <abbr class="spell">DI</abbr> and <abbr class="spell">SSI</abbr> program participants.</i> Research and Statistics Note No. 2008-02. Office of Policy, Office of Research, Evaluation, and Statistics (January).</p>
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<p>Wixon, Bernard, and Denton Vaughan. 1991. Rationale for a <abbr>SIPP</abbr>-based microsimulation model of <abbr class="spell">SSI</abbr> and <abbr class="spell">OASDI</abbr>. ORS Working Paper Series No. 54. Washington, <abbr>DC</abbr>: Social Security Administration.</p>
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