In an attempt to avoid paying disability claims, private insurers are increasingly requiring policyholders to file disability claims with the Social Security system first, even when they don’t qualify for benefits. The practice is clogging the Social Security bureaucracy with a flood of dubious claims that is not only costing taxpayers more, it is making it harder for claimants who are truly disabled from getting Social Security benefits. The problem is a classic example of private companies abusing the commons—in this case, social risk insurance—to defray their own costs of doing business.
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