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Does external medical review reduce disability insurance inflow?

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  • Liebert, Helge

Abstract

This paper investigates the effects of introducing external medical review for disability insurance (DI) in a system relying on treating physician testimony for eligibility determination. Using a unique policy change and administrative data from Switzerland, I show that medical review reduces DI incidence by 23%. Incidence reductions are closely tied to difficult-to-diagnose conditions, suggesting inaccurate assessments by treating physicians. Due to a partial benefit system, reductions in full benefit awards are partly offset by increases in partial benefits. More intense screening also increases labor market participation. Existing benefit recipients are downgraded and lose part of their benefit income when scheduled medical reviews occur. Back-of-the-envelope calculations indicate that external medical review is highly cost-effective. Under additional assumptions, the results provide a lower bound of the effect on the false positive award error rate.

Suggested Citation

  • Liebert, Helge, 2019. "Does external medical review reduce disability insurance inflow?," Journal of Health Economics, Elsevier, vol. 64(C), pages 108-128.
  • Handle: RePEc:eee:jhecon:v:64:y:2019:i:c:p:108-128
    DOI: 10.1016/j.jhealeco.2018.12.005
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    2. Pierre Koning & Heike Vethaak, 2019. "Decomposing Employment Trends of Disabled Workers," Tinbergen Institute Discussion Papers 19-079/V, Tinbergen Institute.

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