from the Philadelphia Fed
Social Security disability insurance began in 1956 as a means of insuring a portion of the earned income of U.S. workers over age 50 against the risk of disability. In 1960, when coverage was extended to all workers, less than half a million workers were collecting benefits, and by 2012 this number had increased to 8.8 million people – an increase from 0.3 percent to 3.6 percent of the population. Over this period, there have been a number of changes: Initially, the law insured only against permanent disabilities, but in 1965 the definition of disability was expanded to cover impairments expected to last at least one year.
In 1973, beneficiaries disabled for two years became eligible for health insurance through Medicare. Of particular interest from the standpoint of this article is that in the past three decades, disability rolls have been growing fast, costing the system more in benefit payouts as well as in forgone tax revenue as more working-age Americans leave gainful employment.