People with disabilities are economically disadvantaged compared to the non-disabled, experiencing lower employment rates, lower wages and higher poverty rates. The steady rise in Social Security Disability Insurance (DI) participation over the past two decades suggests that people with disabilities are working less. One potential explanation for the low employment rates and increasing DI participation rates relates two key factors, an unmet need for health care services and the negative work incentives of two public health insurance programs, Medicare and Medicaid. People with disabilities in need of health insurance face a tradeoff between substantial work and the alternatives, the combined cash and health coverage benefits of either Supplemental Security Income (SSI) and Medicaid, or DI and Medicare.
Recent federal legislation affects the tradeoff. The Balanced Budget Act of 1997 and the Ticket to Work and Work Incentives Improvement Act of 1999 gave states the authority to expand Medicaid coverage to include persons with disabilities at higher income levels. The expanded Medicaid coverage is the Buy-In Program. The Buy-In program alleviates the tradeoff by providing health insurance without the work limits and, if desired, without the associated SSI or DI participation. By de-linking health insurance from cash benefits and by increasing earnings limits, Buy-In provides new opportunities for people with disabilities to obtain health insurance while working at substantial levels.
This dissertation evaluates whether the new opportunities increase employment and/or to decrease disability benefit participation. The economic static labor supply model is used to determine the theoretically predicted effects of the Buy-in program. The static labor supply model is a utility maximization model where individuals balance their labor and leisure to maximize utility under their wage constraint. Cash disability and Medicaid benefits are included in the model through the wage constraint. The static labor supply model predicts an increase in employment for DI recipients. The effect on DI participation is indeterminate. The Buy-in program is not predicted to affect SSI participation or SSI recipients’ employment participation.
Two data sources, the March Supplement to the Current Population Survey and the Survey of Income and Program Participation, are used for samples of individuals with disabilities for 1995 through 2005. Three samples are identified, SSI recipients, DI recipients and individuals with a disability. A separate analysis is conducted to determine if samples based on self-reported work limitation are appropriate for use in evaluations of disability program effects on employment. I conclude that use of self-reported work limitation samples is not appropriate because of bias; individuals’ self-report of work limitation are dependent on work status.
The Buy-In effects on employment and disability benefit participation are identified by four sources of exogenous variation. The first source is state variation in program implementation; only thirty two states have Buy-In programs. The second is the extent of the Buy-In expansion; some state programs are more expansive than others. The third is variation in the receipt of disability cash benefits; the Buy-in program work incentives differ for Supplemental Security Income (SSI) recipients compared to Social Security Disability Insurance (DI) recipients. The fourth is individual access; some disabled individuals are eligible for the expansions and some are not. There is considerable variation in all four sources. Buy-In effects are estimated using difference-in-difference (DID) and difference-in-difference-in-difference (DDD) methods.
State Buy-In programs have been able to fill gaps in health insurance and healthcare services without large increases in Medicaid enrollment. I am not able to detect statistically significant Buy-In effects on work or disability program participation. The empirical findings and the low numbers of national Buy-In participants suggest that the Buy-In effects on employment and disability benefit participation relative to DI recipients, SSI recipients, or people with disabilities if existent, are small. There is considerable state variation in Buy-In programs and a conclusion based on national data may not apply to some state programs. It is also possible that there may be effects within subgroups that are not apparent in estimates for the broad groups studied. Most Buy-In participants are also DI participants. The lack of participation among non-DI recipients is likely due two barriers: a lack of program awareness and a Buy-In disability definition that is contingent on an inability to work.
The findings of this study have important policy implications. The findings should allay any remaining state fears that new or expanded Buy-In programs will result in large increases in Medicaid participation. To alleviate program awareness barriers, states should target outreach efforts to working persons with severe disabilities who are not already disability program applicants or participants. Congress should change the disability definition to remove the work contingency. Resolution of the barriers will provide an insurance alternative to disability benefits and, for some, will prevent job loss and deter DI participation.
|Commitee:||Bishop, Christine, Clark, Robin E., Madrian, Brigitte C.|
|School:||Brandeis University, The Heller School for Social Policy and Management|
|Department:||The Heller School for Social Policy and Management|
|School Location:||United States -- Massachusetts|
|Source:||DAI-A 70/01, Dissertation Abstracts International|
|Keywords:||Disability, Employment, Medicaid, Policy, Poverty, Program participation|
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