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Why did the SSI-disabled program grow so much? Disentangling the effect of Medicaid

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A. S. Yelowitz

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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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Paper provided by University of Wisconsin Institute for Research on Poverty in its series Institute for Research on Poverty Discussion Papers with number 1090-96.

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Handle: RePEc:wop:wispod:1090-96

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. 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. [Downloadable!] (restricted)
  2. Currie, Janet & Gruber, Jonathan & Fischer, Michael, 1995. "Physician Payments and Infant Mortality: Evidence from Medicaid Fee Policy," American Economic Review, American Economic Association, vol. 85(2), pages 106-11, May. [Downloadable!] (restricted)
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  3. Aaron Yelowitz, 1995. "The Medicaid Notch, Labor Supply and Welfare Participation: Evidence from Eligibility Expansions," UCLA Economics Working Papers 738, UCLA Department of Economics. [Downloadable!]
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  4. 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. [Downloadable!] (restricted)
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  5. 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. [Downloadable!]
  6. Angrist, Joshua D & Krueger, Alan B, 1991. "Does Compulsory School Attendance Affect Schooling and Earnings?," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 979-1014, November. [Downloadable!] (restricted)
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  7. 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. [Downloadable!] (restricted)
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  8. 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. [Downloadable!] (restricted)
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  10. 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, ILR School, Cornell University, vol. 48(1), pages 86-102, October.
  11. 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. [Downloadable!] (restricted)
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  12. Moffitt, Robert & Ribar, David & Wilhelm, Mark, 1998. "The decline of welfare benefits in the U.S.: the role of wage inequality," Journal of Public Economics, Elsevier, vol. 68(3), pages 421-452, June. [Downloadable!] (restricted)
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  13. Moffitt, Robert & Wolfe, Barbara L, 1992. "The Effect of the Medicaid Program on Welfare Participation and Labor Supply," The Review of Economics and Statistics, MIT Press, vol. 74(4), pages 615-26, November. [Downloadable!] (restricted)
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  14. 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. [Downloadable!] (restricted)
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  15. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December. [Downloadable!] (restricted)
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  1. Jonathan Gruber, 2000. "Medicaid," NBER Working Papers 7829, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. 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. [Downloadable!]
  3. Mary C. Daly & Richard V. Burkhauser, 2002. "The Supplemental Security Income program," Working Papers in Applied Economic Theory 2002-20, Federal Reserve Bank of San Francisco. [Downloadable!]
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  4. Jonathan Gruber, 1996. "Health Insurance for Poor Women and Children in the U.S.: Lessons from the Past Decade," NBER Working Papers 5831, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Elizabeth T. Powers & David Neumark, 2002. "The Supplemental Security Income Program And Incentives To Take Up Social Security Early Retirement: Empirical Evidence from Matched SIPP and Social Security Administrative Files," Working Papers, Center for Retirement Research at Boston College 2001-06, Center for Retirement Research. [Downloadable!]
  6. 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. [Downloadable!] (restricted)
  7. 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. [Downloadable!]
  8. Brigitte Madrian, 2006. "The U.S. Health Care System and Labor Markets," NBER Working Papers 11980, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. 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. [Downloadable!]
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