Is Social Security Disability Insurance being “tort-reformed”?
The Social Security Administration is an insurance company, albeit one that is publicly-owned and government operated. Therefore, much of the agency’s institutional behavior can best be understood if you look at the motivations underlying various actions in that light.
The Social Security Administration for several years now has been engaged in what for all the world looks like “tort reform”. Let me explain.
An insurance company, even a publicly-owned one, has to balance the books. There are four basic avenues to maintaining the profitability of an insurance business:
- Increase premiums.
- Adjust policy terms to better advantage.
- Change the risk pool by limiting eligibility for coverage.
- Reduce claims paid.
Private insurance companies use all of these strategies. The Social Security Administration, however, has a big problem. It takes Congress and a willing President to effect any strategies pursuant to the first three of the avenues to profitability. Increasing premiums would mean “raising taxes” in the popular vernacular. Congress is willing to play around with raising the retirement age, which is a change in policy terms, but even that is hard. The risk pools can’t be reduced, since all Americans who work are eligible for the Social Security retirement and disability insurance programs under current law.
That leaves avenue number 4. Reducing claims paid is something that the Social Security Administration can do largely on its own (as long as it has acquiescent legislators). The agency has taken to pursuing this strategy with a vengeance. How? With tort reform tactics.
These are the components of a tort reform effort:
- First you demonize policyholders who make claims. The usual tactic is to howl that you are being defrauded by false claims made by policyholders.
- You must try to kill the messenger. These are the attorneys who help policyholders make claims and fight to have them paid.
- You must capture the judges and make them prejudices against policyholders in the adjudication of claims disputes.
- Finally, you must make the whole effort appear to your policyholders to be something other than it is, so they will be supportive of what you are doing without realizing that what you are doing is attacking them.
I am going to offer thoughts about the Social Security Administration pursues “tort reform” in a series of posts that will follow.