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Exploratory Study of Health Care Coverage and Employment of People with Disabilities: Literature Review

Publication Date
Sep 30, 1997

U.S. Department of Health and Human Services

Exploratory Study of Health Care Coverage and Employment of People with Disabilities: Literature Review

Executive Summary

David Stapleton, Gina Livermore, Scott Scrivner, and Adam Tucker

The Lewin Group, Inc.

October 27, 1997

This report was prepared under contract #HHS-100-96-0012 between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and Lewin-VHI, Inc. For additional information about this subject, you can visit the DALTCP home page at or contact the office at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, S.W., Washington, D.C. 20201. The e-mail address is: The Project Officer was Kathleen Bond.

The opinions and views expressed in this report are those of the authors. They do not necessarily reflect the views of the Department of Health and Human Services, the contractor or any other funding organization.

This literature review examines empirical evidence on health care coverage, employment, and public program participation among people with disabilities. The review is part of a larger project investigating the relationship between health care coverage and the employment of people with disabilities contracted for by the Office of Disability, Aging, and Long-Term Care Policy (ODALTCP), Assistant Secretary for Planning and Evaluation (ASPE) in the U.S. Department of Health and Human Services with funds provided by the Office of Disability (OD) in the Social Security Administration (SSA). Other components of the overall project will include analyses of recent national data on employment and health care coverage, analyses of patterns of employment among SSI recipients in the work incentive program that allows health care benefits to continue after earnings are too high for receipt of cash benefits, and patterns of employment in two States where there have been expansions in the Medicaid program.

This is a time of intense discussion about reforms to federal programs that serve people with disabilities. People with disabilities cite fear of losing medical benefits and the services provided under Medicare and Medicaid as significant barriers to employment. Formal proposals for extending Medicare and Medicaid coverage to working people with disabilities have come from many sources including the National Council on Disability and the National Academy of Social Insurance. In addition, several bills that would extend health care coverage beyond that allowed under current law for working people with disabilities have been introduced in the Congress.

While most policy makers agree that current programs create substantial work disincentives for people with disabilities, there is much less agreement about the actual impact of the various disincentives and their relative importance. Advocates of expanded public insurance for people with disabilities are asked for empirical evidence of the actual "effect" of health care coverage on employment and program participation. The goal of this literature review is to synthesize information that may have direct value to policy makers; to provide background for the new research to be conducted under the project; and to identify gaps in knowledge about the importance of health care coverage in the employment and program participation decisions of persons with disabilities.

Major general findings of the literature review include the following:

  • Health care costs for people with disabilities are generally much higher than for those without disabilities. On average, total health expenditures for non-elderly people with disabilities are about six times greater than expenditures of their non-disabled counterparts, and out-of-pocket expenditures are three times greater. One study found that persons with disabilities are significantly more likely to experience catastrophic out-of-pocket expenditures than persons without disabilities.

  • The eligibility requirements for Medicare and Medicaid create financial incentives that discourage or encourage work, depending on the current status of the individual. For people with disabilities, qualification for Medicare and Medicaid is primarily contingent on participation in the Social Security Disability Insurance (SSDI) and Supplemental Security Income Insurance (SSI) programs which require that individuals not engage in substantial work, thereby creating a strong work disincentive for individuals with disabilities who lack health care benefits. For those on the programs, there are work incentive programs which allow for the continuation of health care benefits, but continued coverage is limited either in time (SSDI) or up to certain earnings levels (SSI). The programs thus create odd incentives for working persons with disabilities who lack insurance--they must reduce work to qualify for benefits, but subsequently may increase work and still maintain benefits, but only under limited circumstances.

  • Many SSDI and SSI beneficiaries say they would work, or work more, except that they are afraid of losing their Medicare or Medicaid benefits. There is a growing body of anecdotal and survey evidence that people with disabilities identify loss of health care coverage as an important reason for not working or not working enough to exit from SSI or SSDI. The review found several examples of studies in which persons with disabilities, when asked, have indicated that the loss of health care benefits provided through Medicare or Medicaid was a deterrent to work.

  • Health care coverage has substantial effects on the employment or program participation of other groups--single mothers, older workers, and the elderly. A number of studies find convincing evidence of a relationship between access to health care coverage and work and program participation decisions. Continued Medicaid coverage has been shown to have a positive effect on AFDC participation among singe mothers. A provision of the Medicaid program that allows elderly, low income Medicare beneficiaries to obtain Medicaid coverage without first having to be eligible for SSI is shown to significantly reduce SSI participation for that group. Access to post-retirement health insurance benefits is positively related to exits from the labor force among older workers.

In addition to reporting on the results of past research, the review provides statistics on patterns of disability and work using various definitions of disability. It also includes data on health insurance coverage and type of health care expenditures for persons with disabilities. A final section of the review identifies significant gaps in knowledge about health care coverage and employment, briefly reports on research in progress, and summarizes recent legislative proposals to extend public health care benefits to working persons with disabilities beyond what is allowed in current law.

The Full Report is also available from the DALTCP website ( or directly at
People with Disabilities