Sunday, January 08, 2012

Tackling disability dependence is one of the most difficult tasks facing govts

News out of Britain is Boris Johnson has attacked Conservative plans to reform disability payments. This blog links to media coverage about how the Mayor of London made a critical submission on a forthcoming reform bill which was only uncovered under the Freedom of Information Act. Naturally some very vulnerable people are afraid of what 'cuts' may mean for them and they have my sympathy. But what can governments do about the disproportionate rise of the numbers of people on incapacity benefits? Simply let the dependency rate continue to rise? It's a phenomenon that has occurred across many developed countries.

The following graphs depict NZ's growth in Invalid and Sickness benefits from 1973 to the present. Unfortunately the first is absolute numbers whereas the second two are as a percentage of the working age population.

The growth prompted commissioned research published in 2005 by MSD. Here are the concluding remarks:
Our findings answer many important questions about the growth in IB and SB and the people who receive these benefits.

We find no simple, single explanation for the growth that occurred over the decade to 2002 in numbers receiving IB and SB. The dynamics of growth were different for the two benefits, and varied over time and between subgroups.

Growth in inflows has been an important driver of growth for both benefits. While much of the growth in inflows was inevitable given changes in the size and structure of the population and the increase in the age of eligibility for NZS, more than half cannot be explained by these factors and reflects an increase in the proportion of the population aged 15–59 coming on to the benefits. For SB, most of this growth was due to an increase in entries from outside the benefit system (but when we examine the recent growth between 1999 and 2002, increased transfers from within the benefit system account for 28% of the increase). For IB, entries from outside the benefit system and transfers from inside the benefit system both contributed to the growth. Growth in transfers accounted for 60% of the 1993–2002 increase in the proportion of the population aged 15–59 coming on to that benefit.

The long stays of IB entrants converted sustained growth in inflows into rapid growth in numbers in receipt.  Even though the duration of stays on IB did not increase between the beginning and the end of the decade, duration played a key role in generating the growth that occurred. 

1.1        Possible causal processes

Why did SB and IB inflows grow in the context of a general improvement in economic conditions?

Some of the possible explanations relate to changes in policy and administration, which appear to have shifted people with incapacities on to IB and SB from other parts of the benefit system.

Other possible explanations relate to changes in the structure and intensity of employment which may have caused employment opportunities for people with ill-health and disabilities to worsen in spite of the improvement in overall employment conditions. Analysis of the New Zealand Disability Survey suggests that the presence of a disability reduces an individual’s probability of full-time employment to less than half that for a non-disabled individual with similar demographic characteristics, and that employment disadvantage is particularly notable for those experiencing psychological or psychiatric disabilities (Jensen et al 2005).   

Yet another set of possible explanations relate to changes in the way that qualifying incapacities were interpreted or administered. Determining whether an individual is sufficiently incapacitated to qualify for IB or SB is not straightforward (Lennan 2000). The eligibility criteria are subject to interpretation and a range of factors other than medical eligibility may influence the decisions of assessing doctors (White 2000). Given this, changes in the way in which doctors interpreted the medical criteria for entry could have increased the proportion of the population viewed as having qualifying incapacities.

A final set of possible explanations relate to changes in the prevalence of incapacity.

Growing numbers of people were coming on to SB and IB with a mental illness. The increase is consistent with trends in other developed countries. Comparisons of the prevalence of mental illnesses over time are difficult to make but rates may have been rising.  Possible contributors include an increasing prevalence of stressors such as financial hardship and social isolation. New Zealand drug surveys also indicate a significant increase in the use of amphetamine and methamphetamine between 1998 and 2001. This can lead to a range of psychological disorders, including deep depression and symptoms that may be indistinguishable from schizophrenia, as well as physical disorders such as stroke and respiratory problems (EACD 2002).

We observe patterns of growth that are consistent with the likely effects of the current rise in the prevalence of diabetes. The associated growth in obesity may also be contributing to the growth in numbers of people coming on to SB and IB with musculoskeletal conditions.

Some of the growth in IB and SB might be due to the effects on health of long-term unemployment.

Growth in IB inflow rates was more rapid for those aged 30–39 and 40–49 than for those aged 15–19 and 20–29. There is something different about the cohorts that experienced the economic restructuring of the 1980s and early 1990s in their early to middle years compared to those that entered the labour market either during or after the restructuring.

Our findings show disparities in mortality across ethnic subgroups that are consistent with those found in the New Zealand Census Mortality Study (Ajwani et al 2003). This study found that while life expectancy improved dramatically for Europeans over the two decades to 1999 it was static for Māori and Pacific peoples, the ethnic groups most affected by economic restructuring. The main driver of the divergent trends was higher chronic disease mortality in middle and older ages for Māori and Pacific peoples.

The 1998 National Heath Committee report on the determinants of health in New Zealand suggested that, despite an overall improvement in population health status, socio-economic inequalities in health had not decreased over the preceding two decades and may even have been increasing (National Advisory Committee on Health and Disability 1998). SB and IB trends over the decade to 2002 may partly reflect worsening health status for some groups in New Zealand society.


mike said...

So, in a nutshell, what they are saying is that the rising numbers have very little to do with more people becoming sick or incapacitated per se, and almost everything to do with more people suddenly becoming eligible for a benefit as illegal drug use increases and the qualifying criteria change. Interesting.

macdoctor said...

It has certainly been my experience that the number of sickness beneficiaries with mental health problems has increased markedly over the past few years. The Christchurch earthquakes will probably feature in this, as well as the recession.

Interestingly, I have not noticed an increase in drug abusers on SB - although they may be presenting with anxiety and depression, rather than drug problems.

The criteria for invalids benefit are quite a bit tighter than for SB, hence the rise in IB is a lot less volatile. Many people pop on to SB while recovering from ops and accidents - it pays better than unemployment, you can access other funds and rehab more easily and no-one pesters you about work readiness

Lindsay Mitchell said...

" pesters you about work readiness."

That changed last year when the SB became subject to part-time work-testing.

"From May 2011 Sickness Beneficiaries who have been assessed as being able to work part-time (15 to 29 hours a week) will have an obligation to look for suitable part-time work.
Case managers will be able to require a second opinion from a designated doctor before making a decision to apply part-time work obligations."

macdoctor said...

Indeed, that is the new rule, Lindsay. However, most are not ready for part time work initially anyway. If they were on unemployment, they would still be hassled about work readiness.

I should point out that these are not "bludgers", but people who genuinely cannot work for temporary reasons. WINZ often helps with rehab programs, if they are not already funded by ACC, assisting these folk back into work faster. This is one of the areas where welfare actually does what it is supposed to do - help people temporarily. But it does, as I have pointed out, contribute to the volatility of SB numbers as compared to Invalids benefit.

JC said...

The shift from SB to IB is understandable because it pays better, but it may be a one off thing.. eg, people with Multiple Sclerosis who were on the SB were actively being advised to check their eligibility for the IB over the past decade or so.

Incidentally the population in 1973 was near enough 3.1 million and near enough 4 million in 2003 (Yearbook).