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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

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.

Suggested Citation

  • A. S. Yelowitz, "undated". "Why did the SSI-disabled program grow so much? Disentangling the effect of Medicaid," Institute for Research on Poverty Discussion Papers 1090-96, University of Wisconsin Institute for Research on Poverty.
  • Handle: RePEc:wop:wispod:1090-96
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    References listed on IDEAS

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    Cited by:

    1. Jonathan Gruber, 2003. "Medicaid," NBER Chapters,in: Means-Tested Transfer Programs in the United States, pages 15-78 National Bureau of Economic Research, Inc.
    2. Jonathan Gruber & Brigitte C. Madrian, 2002. "Health Insurance, Labor Supply, and Job Mobility: A Critical Review of the Literature," JCPR Working Papers 255, Northwestern University/University of Chicago Joint Center for Poverty Research.
    3. Lahiri, Kajal & Song, Jae & Wixon, Bernard, 2008. "A model of Social Security Disability Insurance using matched SIPP/Administrative data," Journal of Econometrics, Elsevier, vol. 145(1-2), pages 4-20, July.
    4. Jonathan Gruber, 1998. "Health Insurance and the Labor Market," NBER Working Papers 6762, National Bureau of Economic Research, Inc.
    5. 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.
    6. James Marton & Aaron Yelowitz, 2015. "Health insurance generosity and conditional coverage: Evidence from medicaid managed care in Kentucky," Southern Economic Journal, Southern Economic Association, vol. 82(2), pages 535-555, October.
    7. Brigitte C. Madrian, 2005. "The U.S. health care system and labor markets," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 50(Jun), pages 137-163.
    8. Jonathan Gruber, 1997. "Health Insurance for Poor Women and Children in the U.S.: Lessons from the Past Decade," NBER Chapters,in: Tax Policy and the Economy, Volume 11, pages 169-211 National Bureau of Economic Research, Inc.
    9. Meyer, Bruce D. & Sullivan, James X., 2004. "The effects of welfare and tax reform: the material well-being of single mothers in the 1980s and 1990s," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1387-1420, July.
    10. 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.
    11. Yelowitz, Aaron S, 2000. "Using the Medicare Buy-In Program to Estimate the Effect of Medicaid on SSI Participation," Economic Inquiry, Western Economic Association International, vol. 38(3), pages 419-441, July.
    12. 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.
    13. repec:eee:pubeco:v:149:y:2017:i:c:p:20-34 is not listed on IDEAS
    14. Gina Livermore & David Stapleton & Henry Claypool, "undated". "Costs and Benefits of Eliminating the Medicare Waiting Period for SSDI Beneficiaries," Mathematica Policy Research Reports 3a68e4d07af1446f9f08dd214, Mathematica Policy Research.
    15. Akinori Tomohara & Ho Lee, 2007. "Did State Children’s Health Insurance Program Affect Married Women’s Labor Supply?," Journal of Family and Economic Issues, Springer, vol. 28(4), pages 668-683, December.
    16. repec:mpr:mprres:6218 is not listed on IDEAS
    17. repec:eee:labchp:v:3:y:1999:i:pc:p:3417-3528 is not listed on IDEAS
    18. repec:mrr:papers:wp341 is not listed on IDEAS
    19. Craig, Steven G. & Howard, Larry L., 2014. "Is Medicaid crowding out other state government expenditure? Internal financing and cross-program substitution," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 164-178.
    20. Larry Howard, 2014. "Do the Medicaid and Medicare programs compete for access to health care services? A longitudinal analysis of physician fees, 1998–2004," International Journal of Health Economics and Management, Springer, vol. 14(3), pages 229-250, September.

    More about this item

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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