Using the Medicare Buy-In Program to Estimate the Effect of Medicaid on SSI Participation

This paper assesses the importance of receiving public health insurance through the Medicaid program on participation in Supplemental Security Income (SSI) for the elderly. The implementation of the Qualified Medicare Beneficiary (QMB) program offered a substitute for the Medicaid coverage, and expanded health insurance eligibility to a higher income level than SSI. Although the QMB program offered an alternative health insurance source (which may reduce SSI participation), its introduction may have increased awareness about the SSI program (and hence, participation). I find that the net effect was to reduce SSI participation. The effects were particularly strong for African Americans and for those with less than a high school diploma. Roughly half of the QMB participants were previously covered by SSI and Medicaid. The calculations suggest that the QMB program was not as expensive as it might first appear because of reductions in SSI expenditure.