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Public Health Insurance and SSI Program Participation Among the Aged

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  • Todd Elder

    (University of Illinois at Urbana-Champaign)

  • Elizabeth Powers

    (University of Illinois at Urbana-Champaign)

Abstract

Previous researchers have noted that the ‘categorical’ Medicaid eligibility accompanying the welfare programs Aid to Families with Dependent Children (AFDC) and Supplemental Security Income (SSI) often far exceeds the value of these programs’ cash benefits. It may be the case that the accompanying health insurance, not the cash benefit, is often the decisive factor in welfare participation. If so, welfare participation should decrease when cash and health insurance benefits are unbundled. We present a simple model of program participation with heterogeneous valuation of health insurance and transaction costs of participation. We evaluate the following four implications of the model: 1) SSI participation declines with the expansion of alternative routes to Medicaid (i.e., noncategorical Medicaid); 2) the availability of noncategorical Medicaid increases Medicaid participation among SSI nonparticipating eligibles; 3) the average SSI benefit collected by welfare recipients is higher when noncategorical Medicaid is available; and 4) the average SSI benefit rejected by nonparticipating SSI eligibles is higher when noncategorical Medicaid is available. Overall, the findings on the model’s testable implications are mixed. The estimates imply strikingly large effects of the presence of alternative routes to Medicaid on both SSI and Medicaid participation, but the results for the hypotheses about SSI benefit amounts are sensitive to controls for recipient characteristics.

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Bibliographic Info

Paper provided by University of Michigan, Michigan Retirement Research Center in its series Working Papers with number wp117.

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Length: 37 pages
Date of creation: May 2006
Date of revision:
Handle: RePEc:mrr:papers:wp117

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  1. A. S. Yelowitz, . "Using the Medicare Buy-In Program to Estimate the Effect of Medicaid on SSI Participation," Institute for Research on Poverty Discussion Papers 1102-96, University of Wisconsin Institute for Research on Poverty.
  2. Yelowitz, Aaron S., 1998. "Why did the SSI-disabled program grow so much? Disentangling the effect of Medicaid," Journal of Health Economics, Elsevier, vol. 17(3), pages 321-349, June.
  3. Hill, Daniel H, 1990. "An Endogenously-Switching Ordered-Response Model of Information, Eligibility and Participation in SSI," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 368-71, May.
  4. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  5. Currie, Janet & Gruber, Jonathan, 1996. "Saving Babies: The Efficacy and Cost of Recent Changes in the Medicaid Eligibility of Pregnant Women," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1263-96, December.
  6. A. S. Yelowitz, . "The Medicaid notch, labor supply, and welfare participation: Evidence from eligibility expansions," Institute for Research on Poverty Discussion Papers 1084-96, University of Wisconsin Institute for Research on Poverty.
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Cited by:
  1. Mariacristina De Nardi & Eric French & John B. Jones, 2010. "Why Do the Elderly Save? The Role of Medical Expenses," Journal of Political Economy, University of Chicago Press, vol. 118(1), pages 39-75, 02.
  2. Helen Levy & David R. Weir, 2010. "Take-up of Medicare Part D: Results From the Health and Retirement Study," Journals of Gerontology: Series B, Gerontological Society of America, vol. 65(4), pages 492-501.
  3. Helen Levy & David Weir, 2007. "Take-Up of Medicare Part D and the SSA Subsidy: Early Results from the Health and Retirement Study," Working Papers wp163, University of Michigan, Michigan Retirement Research Center.

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