Does Access to Health Insurance Influence Work Effort Among

Disability Insurance Recipients?

Norma B. Coe, Center for Retirement Research at Boston College andKalman Rupp, Social Security Administration

14th Annual Retirement Research Consortium ConferenceWashington, DCAugust 2, 2012

Does linking HI to DI lead to lower exit rates?

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• Job lock:o Influences retirement decisions.o Dampens entrepreneurial activity.o Decreases job turnover rates by 10-35 percent.

(Gruber and Madrian 1994, Madrian 1994, Buchmueller and Valletta 1996)

• Welfare lock:o Statistically significant, though relatively small.

(Ellwood and Adams 1990 and Yelowitz 1995)

But what about DI lock?

2

• DI beneficiarieso Medicare coverage after 24 monthso Exit rate: 1 percent per year

• SSI recipientso Medicaid coverage immediately in most stateso Exit rate: 4 percent per year

• Does having medical coverage contribute to the low exit rates?

Policy has assumed yes…

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• DI beneficiarieso Maintain Medicare coverage for up to 93 months.

• SSI recipientso 1619b: Most recipients can maintain Medicaid

coverage.

• But do recipients know? (Livermore, Roche, and Prenovitz 2009)

Is there any remaining DI lock?

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• Overall…little evidence

• Heterogeneity is important; we find that:o Beneficiaries with moderate levels of Medicaid spending

are SSI locked More likely to work in states with easier HI access. More likely to leave the rolls in states with easier HI

access.o DI Beneficiaries without access to private health

insurance from other sources are DI locked More likely to leave the rolls in states with easier HI

access.

How do we estimate this?

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• State policy plays an important role in the access and price of health insurance, especially among the disabled.o Regulation of the non-group market

Community rating, guaranteed issueo Medicaid buy-in programso Generosity of Medicaid eligibility

• DI-SSI interactions Medicare-Medicaid interactions

How much do state policies change?

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States with Strict Regulation of Their Non-Group Insurance Market

Source: Authors’ calculations.

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 20060

3

6

9

How much do state policies change?

7

States with Medicaid Buy-in Programs

Source: Authors’ calculations.

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 20060

10

20

30

40

0 1 2

7

14

17

2527

32 32

36

How much do state policies change?

8

States with Large Changes in Their Medicaid Generosity

Source: Authors’ calculations.

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 20060

4

8

12

16

20

Data

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• Administrative datasets: o An individual-level, longitudinal file of individuals ages

18-64 receiving SSDI or SSI at some point between 1999 and 2006 (10-percent sample). DI and SSI awardee characteristics DI and SSI benefit eligibility, benefit amounts,

and date of death annual earnings histories Medicaid and Medicare – coverage and expenditures

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• Merge to the micro data publicly available state-level data:o health insurance regulatory changeso Medicaid generosity measures o Medicaid buy-in programso unemployment rate

• Sample:o almost 1.7 million individuals observed monthly o Annualize the data set, creating an individual-year

(unbalanced) panel data set with over 8 million observations

Data

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Estimation

• Workit: Indicator positive earnings

• HI Marketst: State-level HI variables

• Xi: Time-invariant individual characteristics

• Zit: Time-varying individual characteristics

• Sit: State of residence fixed-effects

• γt: Year fixed-effects

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Overall effect

Effect of State Health Insurance Policies on Positive Earnings Among Disability Beneficiaries

Note: All regressions include all covariates listed in Appendix Table 1, as well as state and year fixed-effects. The graph presents the marginal effects from a probit model. Solid bars indicate statistical significance at the 5 percent level.Source: Authors’ calculations.

Medicaid generos-ity

Medicaid buy-in Strict regulation-0.4%

-0.2%

0.0%

0.2%

0.4%

0.1%

0.3%

-0.3%

Medical spendingHeterogeneous Effects of State Health Insurance Policies on Positive Earnings

Among Disability Beneficiaries

Note: All regressions include all covariates listed in Appendix Table 1, as well as state and year fixed-effects. The graph presents the marginal effects from a probit model. Solid bars indicate statistical significance at the 5 percent level.Source: Authors’ calculations.

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* Strict regula-tion

* Medicaid buy-in

* Medicaid generosity

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

-1.6%

-0.1%

-1.8%

-2.7%

1.0%

-0.9%

No Medicaid High Medicaid

* Strict regula-tion

* Medicaid buy-in

* Medicaid generosity

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

1.2%

-2.2%

0.7%0.4%

-0.4%

0.1%

No Medicare High Medicare

Medical spendingHeterogeneous Effects of State Health Insurance Policies on Disability Exits

Among Disability Beneficiaries

Note: All regressions include all covariates listed in Appendix Table 1, as well as state and year fixed-effects. The graph presents the marginal effects from a probit model. Solid bars indicate statistical significance at the 5 percent level.Source: Authors’ calculations.

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* Strict regula-tion

* Medicaid buy-in

* Medicaid generosity

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

-3.3%

1.9%

-3.1%

-0.2%

0.3%

-2.1%

No Medicaid High Medicaid

* Strict regula-tion

* Medicaid buy-in

* Medicaid generosity

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

0.7%

-2.7%

2.9%

-0.5%-0.1%

0.2%

No Medicare High Medicare

Medicare beneficiaries without private HIHeterogeneous Effects of State Health Insurance Policies on Positive Earnings

Among Disability Beneficiaries

Note: All regressions include all covariates listed in Appendix Table 1, as well as state and year fixed-effects. The graph presents the marginal effects from a probit model. Solid bars indicate statistical significance at the 5 percent level.Source: Authors’ calculations.

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* Strict regulation * Medicaid buy-in * Medicaid generosity-1.6%

-1.2%

-0.8%

-0.4%

0.0%

0.4%

-0.6%

-1.3%

0.2%

Medicare beneficiaries without private HIHeterogeneous Effects of State Health Insurance Policies on Disability Exits

Among Disability Beneficiaries

Note: All regressions include all covariates listed in Appendix Table 1, as well as state and year fixed-effects. The graph presents the marginal effects from a probit model. Solid bars indicate statistical significance at the 5 percent level.Source: Authors’ calculations.

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* Strict regulation * Medicaid buy-in * Medicaid generosity0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

4.1% 4.1%

0.0%

DI-SSI interactions: Gaining SSI/Medicaid if earn > SGA

Stylized Example of Financial Incentives in the SSI and DI Programs, DI-only

Note: This is a stylized example for a single person who has no countable income outside of the SSI and DI programs. In the high-asset scenario, his assets disqualify him for SSI; in the low-asset scenario, the assets are low enough to qualify for SSI benefits. Individual FBR is assumed in this chart. Source: Authors’ calculations.

$0

$1,000

$2,000

$3,0002 × FBR + 85SGA

DI-only, high assetsDI-only, low assets

Earnings

Tot

al in

com

e

17

DI-SSI interactions: Gaining SSI/Medicaid if earn > SGA

Effect of SGA-Cliff and State Health Insurance Policies on Earnings Above SGA Among DI-beneficiaries

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Note: All regressions include all covariates listed in Appendix Table 1, as well as state and year fixed-effects. The graph presents the marginal effects from a probit model. Solid bars indicate statistical significance at the 5 percent level.Source: Authors’ calculations.

* Strict regulation * Medicaid buy-in * Medicaid generosity0.0%

2.0%

4.0% 3.8%

2.1%

0.3%

DI-SSI interactions: Size of “SGA-cliff”Stylized Example of Financial Incentives in the SSI and DI Programs, DI-SSI Concurrent

Note: This is a stylized example for a single person who passes the SSI asset test and has no countable income outside of the SSI and DI programs. The single FBR is used.Source: Authors’ calculations.

$0

$1,000

$2,000

$3,0002 × FBR + 85SGA

SSI-only

Earnings

Tot

al in

com

e

19

DI-SSI interactions: Size of “SGA-cliff”Stylized Example of Financial Incentives in the SSI and DI Programs, DI-SSI Concurrent

Note: This is a stylized example for a single person who passes the SSI asset test and has no countable income outside of the SSI and DI programs. The single FBR is used.Source: Authors’ calculations.

$0

$1,000

$2,000

$3,0002 × FBR + 85SGA

DI-only, low assets SSI-only

Earnings

Tot

al in

com

e

20

DI-SSI interactions: Size of “SGA-cliff”Stylized Example of Financial Incentives in the SSI and DI Programs, DI-SSI Concurrent

Note: This is a stylized example for a single person who passes the SSI asset test and has no countable income outside of the SSI and DI programs. The single FBR is used.Source: Authors’ calculations.

$0

$1,000

$2,000

$3,0002 × FBR + 85SGA

DI-only, low assets SSI-DI concurrentSSI-only

Earnings

Tot

al in

com

e

21

DI-SSI interactions: Size of “SGA-cliff”Effect of SGA-cliff and State Health Insurance Policies on Earnings above SGA

Among the Concurrent DI and SSI Beneficiaries

Note: All regressions include all covariates listed in Appendix Table 1, as well as state and year fixed-effects. The sample is all DI beneficiaries who have also received SSI benefits. The graph presents the marginal effects from a probit model. None of the results are statistically significant.Source: Authors’ calculations.

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* Strict regulation * Medicaid buy-in * Medicaid generosity0.0%

0.4%

0.8%

1.2%

0.0% 0.0%

1.0%

Summary of the findings• Overall, there is little relationship between state health

insurance access and beneficiaries working or leaving the disability rolls. o Previous reforms successful?

• However, there remains SSI lock among those with some, but not extremely high, Medicaid expenditures. o Non-group health insurance regulation. o Generous Medicaid programs.

• There remains DI lock among individuals who do not have access to private health insurance outside of Medicare. o Medicaid buy-in programs.

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Additional Points

• Collaboration between SSA and outside researchers that is encouraged/facilitated by the RRC.

• Administrative data o Merging within and among agencies. o Allows for more research opportunities and more

policy questions to be answered.

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