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Estimates of the Potential Insurance Value of Disability Insurance for Individuals with Mental Health Impairments

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  • John Bound

    (University of Michigan)

  • Kyle J. Caswell

    (Urban Institute)

  • Timothy Waidmann

    (Urban Institute)

Abstract

Since the mid-1980s there has been dramatic growth in the number and fraction of DI and SSI beneficiaries with mental illness. With longer life expectancies and younger ages of disability onset than beneficiaries with physical impairments, their growth exerts added fiscal pressure on the programs. While not specifically focused on mental illness, fears of an increase in the duration (and thus prevalence) of disability claims that may result from this demographic shift have generated calls to tighten eligibility rules again. Using data from the Health and Retirement Study linked to SSA administrative records, we created statistically matched control groups of non-beneficiaries with severe mental illness. We then estimated the earnings, income, and health insurance coverage among rejected DI/SSI applicants with mental illness who have characteristics comparable to persons awarded benefits on the basis of mental impairments. We found that even after controlling for health and demographic characteristics, DI beneficiaries were substantially worse off than rejected applicants in terms of wealth and income. While these rejected applicants with mental illness were worse off than those with physical impairments, our findings suggests that the programs successfully select applicants with the greatest income needs, and that retrenchment could result in significant hardship.

Suggested Citation

  • John Bound & Kyle J. Caswell & Timothy Waidmann, 2013. "Estimates of the Potential Insurance Value of Disability Insurance for Individuals with Mental Health Impairments," Working Papers wp283, University of Michigan, Michigan Retirement Research Center.
  • Handle: RePEc:mrr:papers:wp283
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    File URL: http://www.mrrc.isr.umich.edu/publications/Papers/pdf/wp283.pdf
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    References listed on IDEAS

    as
    1. Barsky R. & Bound J. & Charles K.K. & Lupton J.P., 2002. "Accounting for the Black-White Wealth Gap: A Nonparametric Approach," Journal of the American Statistical Association, American Statistical Association, vol. 97, pages 663-673, September.
    2. Nicole Maestas & Kathleen J. Mullen & Alexander Strand, 2013. "Does Disability Insurance Receipt Discourage Work? Using Examiner Assignment to Estimate Causal Effects of SSDI Receipt," American Economic Review, American Economic Association, vol. 103(5), pages 1797-1829, August.
    3. repec:ran:wpaper:853 is not listed on IDEAS
    4. John Bound & Timothy Waidmann, 2010. "The Social Security Early Retirement Benefit as Safety Net," Working Papers wp240, University of Michigan, Michigan Retirement Research Center.
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