Social Assistance Disability Income Expenditures

The Facts

• Social Assistance disability income costs in Ontario are going up very fast and increasing overall in the rest of Canada
• Many factors explain this:
  • Aging society
  • Medicine and care
  • People with disabilities living longer
  • Increasing poverty
  • Difficulty in accessing the workplace

The Facts

• There are 8 major disability income systems in Canada:
  • EI Sickness
  • CPP Disability
  • Veterans
  • Private Plans
  • Workers' Compensation
  • Social Assistance
  • Disability Tax Credits
  • RDSP

The Facts

• Five of the eight major disability income systems are only available to people who have engaged in regular salaried or wage-paid work
• These five programs: EI sickness, CPP-D, Worker's Compensation, Veterans programs and private plans (most often) do not provide benefits to people with irregular or contract employment

The Facts – Charts Follow

• Social Assistance in Canada for persons with disabilities comprised about 29.4% of program expenditures at $8.5 billion (2009-10)
• In Ontario, $4.1 billion was spent on ODSP comprising approximately 33.2% of expenditures (2009-10)
• The incidence of irregular, part time, and contract work is higher in Ontario

Estimated Disability Benefit Expenditures,
Canada 2008-09
$27.4 B (revised)

• Disability Tax Measures: $2 B
• CPP-D & QPP-D: $4 B
• E1 Sickness: $1 B
• Veterans' Disability Pensions: $2 B
• Social Assistance - Disabled component: $7.7 B
• Worker's Compensation: $5.4 B
• Private Disability Insurance $5.3 B

Estimated Disability Benefit Expenditures,
Canada 2009-10
$28.8 B (revised)

• Disability Tax Measures: $2 B
• CPP-D & QPP-D: $4.3 B
• E1 Sickness: $1 B
• Veterans' Disability Pensions: $2 B
• Social Assistance - Disabled component: $8.58 B
• Worker's Compensation: $5.5 B
• Private Disability Insurance $5.5 B

Estimated Disability Benefit Expenditures,
Ontario 2009-10
$12.4 B

• Disability Tax Measures: $0.8 B
• CPP-Disability: $1.7 B
• E1 Sickness: $0.3 B
• Veterans' Disability Pensions: $0.6 B
• Social Assistance - Disabled component: $4.1 B
• Worker's Compensation: $2.3 B
• Private Disability Insurance $2.4 B

Estimated Disability Benefit Expenditures,
Manitoba 2009-10
$844 M

• Disability Tax Measures: $74 M
• CPP-Disability: $133 M
• E1 Sickness: $33 M
• Veterans' Disability Pensions: $82 M
• Provincial SA for Disabled: $177 M
• First Nations SA for Disabled: $108 M
• Worker's Compensation: $117 M
• Private Disability Insurance $125 M

Estimated Disability Benefit Expenditures,
British Columbia 2009-10
$3.6 B

• Disability Tax Measures: $272 M
• CPP-Disability: $603 M
• E1 Sickness: $161 M
• Veterans' Disability Pensions: $349 M
• Income Assistance for the Disabled: $732 M
• First Nations SA for Disabled: $59 M
• Worker's Compensation: $677 M
• Private Disability Insurance $779 M

Income Support for the Disabled Program Expenditures as Percentage of Total in 2005-06
Ontario, Manitoba and British Columbia

One Issue remains unexplored

• The issue that remains unexplored is the extent to which some social assistance disability income programs are doing more of the 'heavy lifting' in the disability income arena
• That is, with more irregular, contractual and part-time work, are the five disability income systems in Ontario and Canada doing less?
• Put another way, are they increasing along with ODSP and other provincial and territorial social assistance programs? The following charts tell the story:

Income Support for the Disabled by Program:
Percentage Change in Expenditures from 2005-2006 to 2009-10
Canada

• Disability Tax Measures: 20.5%
• CPP-D & QPP-D: 12.8%
• E1 Sickness: 19.3%
• Veterans' Disability Pension Programs: 22.6%
• SA - Disabled component: 24.2%
• Worker's Compensation: 13.1%
• Private Disability Insurance 15.7%

Income Support for the Disabled:
Percentage Increase From 2005-06 to 2009-10, Selected Areas
Canada

• SA for the Disabled: 24.2%
• Total Income Support for the Disabled: 19.5%
• Total Income Support for the Disabled Excluding SA: 17.6%

Income Support for the Disabled by Program:
Percentage Change in Expenditures from 2005-2006 to 2009-10
Ontario

• Disability Tax Measures: 20.5%
• CPP-D: 13.6%
• E1 Sickness: 14.5%
• Veterans' Disability Pensions: 11.3%
• ODSP: 35.4%
• First Nations SA for Disabled: 9.0%
• Worker's Compensation: 15.5%
• Private Disability Insurance: 26.5%

Income Support for the Disabled:
Percentage Increase From 2005-06 to 2009-10
Ontario

• ODSP: 35.4%
• Total Income Support for the Disabled: 23.3%
• Total Income Support for the Disabled Excluding ODSP: 18.1%

Income Support for the Disabled by Program:
Percentage Change in Expenditures from 2005-2006 to 2009-10
Manitoba

• Disability Tax Measures: 20.5%
• CPP-D: 19.9%
• E1 Sickness: 17.6%
• Veterans' Disability Pensions: 0.9%
• Provincial SA for Disabled: 13.5%
• First Nations SA for Disabled: 25.1%
• Worker's Compensation: 22.1%
• Private Disability Insurance: 6.8%

Income Support for the Disabled:
Percentage Increase From 2005-06 to 2009-10
Manitoba

• Total SA for the Disabled: 13.5%
• Total Income Support for the Disabled: 15.2%
• Total Income Support for the Disabled Excluding SA: 15.6%

Income Support for the Disabled:
Percentage Increase From 2005-06 to 2009-10
British Columbia

• Disability Tax Measures: 20.5%
• CPP-D: 19.3%
• E1 Sickness: 22.6%
• Veterans' Disability Pensions: 5.9%
• Income Assistance for the Disabled: 27.1%
• First Nations SA for Disabled: 4.9%
• Worker's Compensation: 5.5%
• Private Disability Insurance: 25.0%

Income Support for the Disabled:
Percentage Increase From 2005-06 to 2009-10
British Columbia

• Income Assistance for the Disabled (IAD): 27.1%
• Total Income Support for the Disabled: 17.6%
• Total Income Support for the Disabled Excluding IAD: 15.4%

Percentage Change in Disabled Caseload
New Brunswick, Ontario, Manitoba, BC and Alberta
2005 to 2011

• New Brunswick (EBP): 5.3%
• Ontario (ODSP): 35.5%
• Manitoba: 14.7%
• Alberta AISH: 36.1%
• British Columbia: 39.3%

Percentage Change in Estimated SA Spending on the Disabled
New Brunswick, Ontario, Manitoba, Alberta and BC
2005-06 to 2009-10

• New Brunswick EBP: 11.6%
• Quebec Social Solidarity: 7.9%
• Ontario ODSP: 35.4%
• Manitoba EIA for Disabled: 13.5%
• Alberta AISH: 52.2%
• BC Assitance for Disabled: 27.1%

Percentage Change in Estimated SA Spending on the Disabled
New Brunswick, Ontario, Manitoba, Alberta and BC
2005-06 to 2009-10 and 2010-11

Some Interesting Trends…

• Social Assistance disability programs share of total disability income programs has risen from 28.3% to 29.4% across Canada in the last 5 years
• In Ontario, the share has risen from 30.2% to 33.2%

Some Questions for Exploration…

• Are work-triggered disability income programs not pulling their weight? Are they excluding non-regular employment? Why are they increasing so much more slowly than social assistance?
• Are social assistance disability income programs getting a bad rap for the wrong reasons?

Some Policy Questions…

• Is the slow drift to social assistance as the dominant income system for persons with disabilities a good thing?
• Is it good policy?
• Does it represent policy by trend in labour force characteristics or something else?

What We Need to Do Now…
Test the Hypothesis

• What are the facts related to non-traditional work and disability?
• Who is getting benefits from social assistance disability income programs? What are the trends in overlap with other programs?
• Who benefits from the work triggered benefits?
• Will the current trends we see now continue? Accelerate? Decelerate? Why and why not?

Some Other Hypotheses

• Disability Culture (OECD concept)
  • The Neo-conservative take may be that some persons are work shy and may not be diligent in retaining work where benefits are in place.
  • Another take is that with disability benefits on ODSP being 78% higher than OW, persons who don't believe they have a reasonable opportunity to work may attempt to marshal existing impediments in such a way as to obtain disability benefits. Such persons also avoid stigma.

Some Other Hypotheses

• Lack of Knowledge
  • Lack of information about programming and rights as an employee – some evidence to suggest this is true
  • This is connected to the criticism that people could work for an agency and never know about their rights/benefits and never seek them out

Some Other Hypotheses

• Job Security (Part of Original hypothesis)
  • Deterioration of traditional employment
• Recession
  • Theory that people who get laid off in a recession are less experienced workers (who have higher injury risk first months on the job) and those more likely to get hurt – incentive effect for employers to reduce workplace injury that would explain lower growth in benefit expenditure unrelated to workforce change
  • Difference between first months on job and later show that workers compensation rates are lower because of this
  • Recession also makes it harder for those on claim to get reemployed
  • Claim frequency goes down

Some Other Hypotheses

• Time Limits / Accelerated Decay of Benefits
• Interaction between Workers Compensation and employment programs
  • Strengthening the expectations that workplaces have
    • Premiums set for workplaces and workers compensation insurance bill
    • There is a financial incentive for those employers who bring workers back to work
    • Worth their while to bring worker back early
    • In Ont., employer has an obligation to reemploy disabled worker for 2 year period but this obligation is not regulatory

Some Other Hypotheses

• Time Limits / Accelerated Decay of Benefits
  • Fiscal pressure: long duration disability episodes
    • 10% offered retraining/employment assistance programming
    • They can be deemed employable once these avenues are exhausted… ‘We’ve done what we can… now it is your problem'. Where employee benefits are cut off. More than 1000 face this.
    • Example: 30% of flow into BC provincial disability benefit programs are of people who used to be receiving workers compensation benefits

Some Other Hypotheses

• Experience Rating
  • Possible result is higher discipline and the result that expenditures are being kept lower as a result

Possible Data Sources

• LAD
  • 20% sample of Canadians through tax records through CRA
  • Tells us who is in labour market, amount of labour market earnings and income from other sources
• SLID
  • 30 thousand Canadians/longitudinal
  • 6 year panel answering same question every year
  • Not robust, though, for incidence of work disability
• PALS
  • 2006 was the last survey so perhaps not useable

Statisics Canada

• Statscan data on disability expenditures: no single source can provide everything but a few sources could help confirm trends:
• LAD does have data on the disability tax credits, CPP-D, Worker’s Comp and SA from 1992-2009
• Not possible to identify EI sickness benefits as different from EI regular benefits on the LAD nor can it identify pwd’s apart from the receipts of these items
• LAD can trace pwd’s over time to explore, e.g. duration of use of disability deductions/credits
• There are no veteran’s pensions on tax data or on SLID

"Welfareization" of Disability Benefits:
Can it be a good thing?

• Pro:
  • Social assistance allows a recipient to work and receive benefits; no automatic cut-off
  • Not time limited; ancillary benefits often good
• Con:
  • Low rates; stigma; deducts other income sources
  • Low asset limits; closely managed

Answer for future: Take the best of both worlds!