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Why Did the SSI-Disabled Program Grow So Much? Disentangling the Effect of Medicaid

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  • Aaron Yelowitz

    (UCLA)

Abstract

The participation rate for working-age adults in the Supplemental Security Income (SSI) program increased by 37 percent from 1987 to 1993. This paper examines the role of public health insurance provided through Medicaid on the SSI participation decision. I use the rapid growth in Medicaid expenditure across states and over time as a proxy for its value. The estimation is complicated by the easing of standards for determining disability. If the marginal individual who entered SSI under these easier standards was healthier than the average participant, then average Medicaid expenditure would fall. Thus, conventional OLS estimates could lead to a spurious negative correlation between average Medicaid expenditure and SSI participation. I therefore apply two-stage least squares (TSLS) to estimate Medicaid's effect, using Medicaid expenditure for blind and elderly SSI recipients, and adult and child AFDC recipients as instruments for disabled Medicaid expenditure. The TSLS estimates indicate that rising Medicaid expenditure significantly increased the SSI participation for whites, but had little effect on African Americans. Among whites, the rising value of Medicaid explains one-third of the growth in SSI participation.

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Bibliographic Info

Paper provided by UCLA Department of Economics in its series UCLA Economics Working Papers with number 748.

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Date of creation: 01 Feb 1996
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Handle: RePEc:cla:uclawp:748

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Web page: http://www.econ.ucla.edu/

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  1. Robert Moffitt & Barbara Wolfe, 1990. "The Effect of the Medicaid Program on Welfare Participation and Labor Supply," NBER Working Papers 3286, National Bureau of Economic Research, Inc.
  2. Robert Moffitt & David Ribar & Mark Wilhelm, 1996. "The Decline of Welfare Benefits in the U.S.: The Role of Wage Inequality," NBER Working Papers 5774, National Bureau of Economic Research, Inc.
  3. Jeff Grogger & Stephen G. Bronars, 1997. "The Effect of Welfare Payments on the Marriage and Fertility Behavior of Unwed Mothers: Results from a Twins Experiment," NBER Working Papers 6047, National Bureau of Economic Research, Inc.
  4. Rebecca M. Blank, 1989. "The Effect of Medical Need and Medicaid on AFDC Participation," Journal of Human Resources, University of Wisconsin Press, vol. 24(1), pages 54-87.
  5. Janet Currie & Jonathan Gruber, 1994. "Saving Babies: The Efficacy and Cost of Recent Expansions of Medicaid Eligibility for Pregnant Women," NBER Working Papers 4644, National Bureau of Economic Research, Inc.
  6. Joshua D. Angrist & Alan B. Krueger, 1990. "Does Compulsory School Attendance Affect Schooling and Earnings?," NBER Working Papers 3572, National Bureau of Economic Research, Inc.
  7. Aaron Yelowitz, 1995. "The Medicaid Notch, Labor Supply and Welfare Participation: Evidence from Eligibility Expansions," UCLA Economics Working Papers 738, UCLA Department of Economics.
  8. Madrian, Brigitte C, 1994. "Employment-Based Health Insurance and Job Mobility: Is There Evidence of Job-Lock?," The Quarterly Journal of Economics, MIT Press, vol. 109(1), pages 27-54, February.
  9. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
  10. James J. Heckman & Thomas E. MaCurdy, 1985. "A Simultaneous Equations Linear Probability Model," Canadian Journal of Economics, Canadian Economics Association, vol. 18(1), pages 28-37, February.
  11. Lundberg, Shelly & Plotnick, Robert D, 1995. "Adolescent Premarital Childbearing: Do Economic Incentives Matter?," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 177-200, April.
  12. Jonathan Gruber & Brigitte C. Madrian, 1994. "Health insurance and job mobility: The effects of public policy on job-lock," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 48(1), pages 86-102, October.
  13. Yelowitz, Aaron S, 2000. "Using the Medicare Buy-In Program to Estimate the Effect of Medicaid on SSI Participation," Economic Inquiry, Western Economic Association International, vol. 38(3), pages 419-41, July.
  14. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December.
  15. Joshua D. Angrist, 1991. "Instrumental Variables Estimation of Average Treatment Effects in Econometrics and Epidemiology," NBER Technical Working Papers 0115, National Bureau of Economic Research, Inc.
  16. B. Wolfe & S. C. Hill, . "The effect of health on the work effort of low-income single mothers," Institute for Research on Poverty Discussion Papers 979-92, University of Wisconsin Institute for Research on Poverty.
  17. R. A. Moffitt, . "The effect of work and training programs on entry and exit from the welfare caseload," Institute for Research on Poverty Discussion Papers 1025-93, University of Wisconsin Institute for Research on Poverty.
  18. Barbara L. Wolfe & Steven C. Hill, 1995. "The Effect of Health on the Work Effort of Single Mothers," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 42-62.
  19. Anne E. Winkler, 1991. "The Incentive Effects of Medicaid on Women's Labor Supply," Journal of Human Resources, University of Wisconsin Press, vol. 26(2), pages 308-337.
  20. Janet Currie & Jonathan Gruber & Michael Fischer, 1994. "Physician Payments and Infant Mortality: Evidence from Medicaid Fee Policy," NBER Working Papers 4930, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Jonathan Gruber & Brigitte C. Madrian, 2002. "Health Insurance, Labor Supply, and Job Mobility: A Critical Review of the Literature," JCPR Working Papers 255, Northwestern University/University of Chicago Joint Center for Poverty Research.
  2. Jonathan Gruber, 2003. "Medicaid," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 15-78 National Bureau of Economic Research, Inc.
  3. Brigitte Madrian, 2006. "The U.S. Health Care System and Labor Markets," NBER Working Papers 11980, National Bureau of Economic Research, Inc.
  4. Elizabeth Powers & David Neumark, 2001. "The Supplemental Security Income Program and Incentives to Take Up Social Security Early Retirement: Empirical Evidence from Matched SIPP and Social.," NBER Working Papers 8670, National Bureau of Economic Research, Inc.
  5. Jonathan Gruber, 1997. "Health Insurance for Poor Women and Children in the U.S.: Lessons from the Past Decade," NBER Chapters, in: Tax Policy and the Economy, Volume 11, pages 169-211 National Bureau of Economic Research, Inc.
  6. Yelowitz, Aaron S, 2000. "Using the Medicare Buy-In Program to Estimate the Effect of Medicaid on SSI Participation," Economic Inquiry, Western Economic Association International, vol. 38(3), pages 419-41, July.
  7. Todd Elder & Elizabeth Powers, 2006. "Public Health Insurance and SSI Program Participation Among the Aged," Working Papers wp117, University of Michigan, Michigan Retirement Research Center.
  8. Meyer, Bruce D. & Sullivan, James X., 2004. "The effects of welfare and tax reform: the material well-being of single mothers in the 1980s and 1990s," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1387-1420, July.
  9. Akinori Tomohara & Ho Lee, 2007. "Did State Children’s Health Insurance Program Affect Married Women’s Labor Supply?," Journal of Family and Economic Issues, Springer, vol. 28(4), pages 668-683, December.
  10. Lahiri, Kajal & Song, Jae & Wixon, Bernard, 2008. "A model of Social Security Disability Insurance using matched SIPP/Administrative data," Journal of Econometrics, Elsevier, vol. 145(1-2), pages 4-20, July.
  11. Gina Livermore & David Stapleton & Henry Claypool, 2009. "Costs and Benefits of Eliminating the Medicare Waiting Period for SSDI Beneficiaries," Mathematica Policy Research Reports 6218, Mathematica Policy Research.
  12. Elizabeth T. Powers & David Neumark, 2003. "The Supplemental Security Income Program and Incentives to Claim Social Security Retirement Early: Empirical Evidence from Matched SIPP and Social Security Administrative Files," Working Papers wp036, University of Michigan, Michigan Retirement Research Center.

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