Despite What Some Think, Social Security Is Run Efficiently

On Monday, we mentioned how the dramatic cases of Social Security fraud tend to make people think that the system is filled with abuses and wasteful spending. There will always be criminals and cases of fraud. Even Social Security’s biggest proponents are working to root out these problems, but thinking that they represent the whole system overlooks some key facts. Today we discuss how efficient Social Security actually is. If you have questions regarding eligibility for disability benefits, more information is available from a Tulsa SSI law firm.

The efficiency of Social Security

In terms of administrative costs, Social Security is run extremely efficiently. In the 1950s and 1960s, administrative costs ran at about two percent of Social Security’s payouts, and much of those costs was due to the disability benefits program. In 1959, for example, 10.3 percent of the disability benefits program’s spending went towards administrative costs.

This is in stark contrast to the 1990s and today. In 2010, administrative costs were just 0.9 percent of all Social Security spending. For disability benefits, 2.3 percent of its spending was devoted to administrative costs.

Compared to administrative costs of other organizations, Social Security is run efficiently. Estimates vary, but Medicare’s administrative costs run in the neighborhood of 5 to 6 percent. The Congressional Budget Office looked at the administrative costs of private insurers and found that their administrative costs ranged from 7 percent for the larger companies all the way up to 26 percent for the smaller ones.

Whether you compare Social Security’s administrative costs to these other programs or you look at in absolute terms, very little of Social Security’s money is spent on administrative items. The majority of it – over 99 percent – goes to its sole purpose: providing financial support to Americans facing difficult times.

If you or a family member has benefited from Social Security benefits, we welcome your comments below.

Troutman & Troutman, P.C. – Tulsa Social Security disability lawyers


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