Applying Aspects of Disability Determination Methods From the Netherlands in the U.S.

In recent years, there has been a policy debate about whether the disability determination process for Social Security Disability Insurance (DI) benefits in the U.S. should be revised to reflect changes in the functional requirements of work. In particular, some policy makers have expressed interest in incorporating insights about how disability determination in other countries relies on information about occupational requirements to make disability determinations. The disability determination system in the Netherlands is one potential model.1 The Netherlands uses a unique, direct method of measuring an applicant's residual work capacity. Disability assessment focuses on first identifying specific residual functional abilities. These standardized functional abilities are then directly linked to standardized requirements of existing jobs in the Netherlands, allowing direct computation of the set of feasible jobs and residual earnings capacity of an applicant, conditional on educational attainment. Moreover, it is possible to calculate an estimated degree of disability-related loss in earnings capability, defined as the ratio of estimated residual earnings capacity to prior earnings. This degree of disability is used to determine eligibility for DI benefits, which can be received as full benefits or as partial benefits combined with part-time work. In contrast, the system in the U.S. relies heavily on delineation of medical conditions, and does not utilize a standardized, explicit link between an applicant’s functional abilities and the functional requirements of potential jobs in the national economy. Instead, applicants are deemed to have no work capacity if they have one or more specific medical conditions or if they fall into certain categories under the medical-vocational guidelines, based on age, education, prior work experience and an aggregated measure of residual functional capacity. The guidelines were originally intended to identify as disabled only those applicants with little remaining capacity for physically demanding work and who had limited job prospects because of their low education, narrow skills, and/or age, but the guidelines have not been updated since 1978 and only ever comprised a coarse mapping between health and alternative job prospects (Maestas 2019). The goal of this paper is to explain how work capacity is measured in the Netherlands and then apply aspects of that method to a representative sample of Americans. The insights from this project could motivate improvements in the current disability determination process. Moreover, understanding the explicit link between functional abilities, and the requirements of occupations could provide useful inputs for SSA’s work incentive programs by explicitly listing jobs that a beneficiary is capable of performing.