Nov. 6, 2005 — Why does Puerto Rico get nearly three times as much money, proportionately, from the U.S. Government‛s Social Security Disability Insurance program as the Virgin Islands does?
Even though the formal rules are exactly the same everywhere under the U.S. flag?
Further, are Puerto Ricans really five times as likely to be crazy as Virgin Islanders? (More on that later.)
The SSDI program, not to be confused with the larger Social Security retirement program, provides monthly cash benefits to former workers between the ages of 18 and 64 who have been determined by the Social Security Administration to be too disabled to work.
Here are the numbers, all drawn from federal documents: among working age (i.e.18-64) people, 8.33 percent of those in Puerto Rico get these SSDI benefits, some 4.36 percent do on the mainland, and only 3.05 percent do in the Virgin Islands. The most recent federal data indicated that there were 1,988 disabled workers or dependents getting these funds in the territory.
The differences in the percentages shown above can be translated into differences in many millions of dollars for the territory‛s economy.
With monthly benefits averaging $723 in the Virgin Islands, the total inflow of these funds in 2003 was about $16.2 million. Were the Virgin Islands getting benefits at the same rate as the mainland, given the $723 a month average benefit, the flow would be about $23 milllion a year, nearly an additional $7 million a year in cash benefits. At that level, there would be another approximately 800 disabled Virgin Islanders receiving the monthly checks.
Were the Virgin Islands to have 8.33 percent of its working-age population receiving the benefits, like Puerto Rico, the cash received would be about $47 million a year. That‛s pretty theoretical, but it would be a difference of more than $30 million a year.
Down the road there is yet another source of millions for the territory were it to increase its use of the SSDI program. Two years after an individual is found eligible for SSDI that person, automatically, becomes eligible for Medicare. And, as noted in an earlier article, individual Medicare beneficiaries in the U.S.V.I. draw about $3,178 worth of health care annually. (See "Getting More U.S. Health Dollars into the Virgin Islands Economy").
Though this is one of the Source‛s continuing series of articles on the territory‛s under-utilization of federal funds, it is possible that in this case, we also have an instance, in Puerto Rico, of the over-utilization of Uncle Sam‛s money.
There are substantial barriers to increasing the number of SSDI beneficiaries in the Virgin Islands. First, while everyone is aware of his or her age, not everyone who is sufficiently disabled to draw these benefits is aware of that possibility. Second, applying for SSDI is a much more complex process than applying for retirement benefits, though in both cases the applicant goes to the nearest Social Security office. Much medical and occupational evidence has to be gathered before Social Security can rule that the applicant is, or is not, permanently disabled and no longer able to work.
The evidence, once gathered, is sent off to specialists. Decision-making can take a long time, and then, after an eligibility decision has been made, there is another five-month waiting period before the monthly checks begin to arrive. If the applicant is rejected, then there is a three-layer appeals and review system in place.
But the same rules outlined above apply in Puerto Rico, too – why the different results?
It is hard to believe that Puerto Ricans are five times as likely to be disabled as Virgin Islanders; it is equally hard to believe that people with disabilities migrate to Puerto Rico and migrate away from the Virgin Islands.
On the other hand, common sense would indicate that a social insurance program with a fixed level of benefits would be more likely to draw applications in a poorer, rather than a richer environment. Puerto Rico had a 2000 Census median family income of $16,000, much the lowest of any state or territory; in contrast the median in the Virgin Islands was $28,000 a family, and it was $50,000 on the mainland.
Common sense, again, might suggest that the decision-making process in poverty-stricken Puerto Rico might be less strict than on the more affluent mainland, but, for the moment that is no more than informed speculation.
Some light can be shed on that decision-making process, however, by a particular cross-tabulation published by the Social Security Administration. It shows the reasons why disability benefits were granted in different areas, or, more formally "percentage distribution by state or other area and diagnostic group."
One can come to the politically incorrect conclusion from these data that Puerto Ricans are more likely to be crazy than Virgin Islanders; or, in the words of the bureaucrats, there is five times the incidence of "mental disorders other than retardation" among the Puerto Ricans of working age (18-64) than among similarly aged Virgin Islanders. For every 10,000 working age adults in Puerto Rico there are 269 in the just-named category; in the Virgin Islands it is 56 out of 10,000, about a five-to-one ratio.
Interestingly, when it comes to being blind, a relatively rare condition but one easier to pin down than insanity, the difference between the islands is not so large. The proportion of the work force getting SSDI because of blindness is about twice as high in Puerto Rico as in the rest of the American islands. The condition is too rare for the feds to publish statistics for each of the other four American island groups (V.I., Guam, the Marianas, and American Samoa).
Getting back to the policy issue for the Virgin Islands, how does the apparent $7 million gap between reality and potentiality in this program compare to other non-utilizations of federal programs previously reported in the Source?
The disability insurance non-utilization, while less than the Medicare shortfall of many scores of millions a year, is about the same as the reported public works spending gap and more than twice the size of the short-fall in the use of federal education funds. (See "V.I. Shortchanged by Federal Medical Funds Formulae," "$7 Million in Federal Grants Still Unused by Public Works," and "Analysis: V.I. Schools Fail to Use $2.9 Million in Federal Funds").
It is clear why the territory lags in the use of federal education funds – the Virgin Islands Department of Education does not fill out some of the noncompetitive applications for grants made available to it in a timely way. But the reasons for the apparent local shortfall in Social Security Disability Insurance receipts are more complex and will be examined in a future Source article.
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