Disability Insurance and Healthcare Reform: Evidence from Massachusetts
As health insurance becomes available outside of the employment relationship as a result of the Affordable Care Act (ACA), the cost of applying for Social Security Disability Insurance (SSDI)—potentially going without health insurance coverage during a waiting period totaling 29 months from disability onset—will decline for many people with employer-sponsored health insurance. At the same time, the value of SSDI and Supplemental Security Income (SSI) participation will decline for individuals who otherwise lacked access to health insurance. We study the 2006 Massachusetts healthcare reform to estimate the potential effects of the ACA on SSDI and SSI applications.
- We find that the MA health insurance reform in 2006-07 initially increased applications slightly for SSDI in MA relative to neighboring states, although the difference in application rates disappeared by late 2008.
- Counties with low pre-reform health insurance coverage rates experienced net decreases in total SSDI and SSI applications, whereas counties with high pre-reform health insurance coverage rates experienced net increases in SSDI and SSI applications relative to neighboring states.
- New SSDI applications in high insurance counties came from the newly unemployed, whereas the new SSDI applications in low insurance counties came from the long term unemployed/disabled.
- Since MA had higher health insurance coverage rates than the rest of the U.S. prior to the reform, this may point to a potential decrease in SSDI and SSI applications in the coming years, with a shift (at least initially) in the composition of new applications toward the SSDI program, as provisions of the Affordable Care Act go into effect.
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Paper IDWP 2013-289