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Last updated January 1, 2014

WASHINGTON, Feb. 6 - People with disabilities would lose income and benefits under the major proposals to revamp Social Security by creating individual investment accounts, a new government study said today.

The disabled account for 17 percent of Social Security beneficiaries - about 7.5 million of the 45 million recipients - but have received little attention in the national debate over the future of the program.

President Bush has said he wants to let workers put some of their Social Security payroll taxes into personal investment accounts, but at the same time he has championed the rights of people with disabilities.

The new study, by the General Accounting Office, an investigative arm of Congress, concludes that "even under the best of circumstances, Social Security reform proposals would reduce benefits" for people with disabilities.

For a worker with average earnings who first receives disability benefits at the age of 45, the report said, the reduction in lifetime benefits would be in the range of 4 percent to 18 percent. The average benefit for disabled workers is now $786 a month.

"Most disability insurance beneficiaries would be adversely affected by the reform proposals," the office said in a report to Senator Tom Harkin, Democrat of Iowa.

Proposals for individual investment accounts are often paired with proposals that would reduce Social Security benefits, compared with the amounts payable under existing laws. Ddvocates of such private accounts say the income from investing in stocks and bonds would largely offset the reductions in benefits.

That might be true for some or even many retirees. But the General Accounting Office said, "Income from the individual accounts was not sufficient to compensate for the decline in the insurance benefits that disabled beneficiaries would receive" under the major proposals.

Under many of the proposals, the study said, disabled workers would receive less income from individual accounts than retirees because the disabled typically have shorter work histories and would have less time to accumulate money in their accounts.

In an interview, Mr. Harkin, the chief sponsor of the Americans With Disabilities Act of 1990, said: "This report is a wake-up call to policy makers, to all of us in Congress. Social Security is not just about retirement. It's also about protecting people who are wiped out by accident or illness that leaves them disabled. You can plan your retirement, but you can't plan for disability. It can happen to anyone at any time.

"Before we reform Social Security," Mr. Harkin said, "we better stop and think about people with disabilities because they are among the most vulnerable in society."

Michael Tanner of the Cato Institute, a major advocate of individual investment accounts, said he had not closely analyzed the effects on people with disabilities.

One of the proposals for individual accounts was offered in 1999 by Representatives Jim Kolbe, Republican of Arizona, and Charles W. Stenholm, Democrat of Texas. An aide to Mr. Kolbe said today that the congressman was revising his bill to address concerns about the reduction in benefits for people with disabilities. "We realize that a person who is permanently disabled at the age of 25 may have only five or six years to accumulate money in a personal account," the aide said.

The General Accounting Office said the major proposals for Social Security, by reducing benefits, would probably increase the costs of a separate program that provides cash assistance to low-income people with disabilities - Supplemental Security Income.

More than 30 percent of the people receiving disability benefits have mental impairments. Such impairments could, in some cases, limit their ability to make wise investment decisions. Quincy S. Abbot of West Hartford, Conn., said, "Take the case of my daughter, Rebecca," who is 38 years old and has an I.Q. of 40 to 50. "I can't imagine someone like her making the investment choices she'd have to make if she had a separate investment account," Mr. Abbot said.

Most disabled people on Social Security, including disabled workers, receive cash benefits from the disability insurance program. But some in their 20's and 30's, who have been disabled since childhood, receive assistance through the old-age and survivors insurance program, as dependents of retired workers.

Melissa Kaplan notes:
Most healthy people do not realize that not only does Medicare not cover essential services, it does not cover prescription drugs nor OTC drugs, supplements, medical supplies, and services prescribed by physicians for their disabled patients. Those of us who were able to work and save money prior to become disabled and unable to work have to draw on those savings, often on a monthly basis, just to make ends meet. I personally run an average of $600-800 a month short, and I am still unable to take all the drugs or access all the services my physicians have prescribed.

The problem is compounded by the fact that an increasing number of physicians and other health care providers are opting out of being Medicare and Medicaid providers because the reimbursement rates are and have been ridiculously low.

As a result, sick people are getting sicker, and people who might have had a chance to achieve a higher level of functioning that might have enabled them to work part time to help offset some of the non-covered expenses are unable to do so because they can't get the minimum care and resources they need to attain that higher level of function.

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