Performance Improvement 1999. Exploratory Study of Health Care Coverage and the Employment of People with Disabilities

02/01/1999

Highlights
This study, commissioned by the Office of Disability, Aging and Long-Term Care Policy (DALTCP) within the Office of the Assistant Secretary for Planning and Evaluation (ASPE), reviewed existing research and examined new data to gain greater understanding of the relationships between access to health care, employment, and public program participation for persons with disabilities. Major sources of data include the 1993 Survey of Income and Program Participation (SIPP), the 1994 National Health Interview Survey, and administrative data from the Social Security Administration.

The evidence accumulated in this exploratory study supports the contention that the potential lack of adequate health care coverage prevents some people with disabilities from working or working as much as they would like. Highlights of the study 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 finds 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. At the same time, these programs include work incentive programs.
  • 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.
  • The empirical analysis of SSA administrative data yields strong evidence that some SSI recipients who work substantially restrain their earnings in order to stay below the SSI 1619 (b) income threshold, an amount above which Medicaid benefits are no longer available.

Background

Evidence is clear that persons with disabilities cite the fear of loss of medical benefits and other services provided under Medicaid and Medicare, such as personal care services, employment support services, case management and long-term care services, as significant barriers to employment. Despite the need to effectively change public health care coverage to more appropriately meet the long-term care needs of persons with disabilities, there is no agreement on exactly what should be done, and little knowledge of how health and long-term care coverage work in concert with other supports.

Methods
The study reviewed the relevant literature on health care coverage, employment, and public program participation related specifically to persons with disabilities. In addition, researchers assessed the impact of increases in the earnings limit established under Section 1619 (b) of the Social Security Act on earnings among SSI recipients participating in 1619 (b). The SSI program provides income benefits to poor persons with disabilities. Participation in SSI also entitles a person with disabilities to health care benefits under Medicaid. Under 1619 (b) provisions, SSI recipients may have "chargeable income" (income after certain reductions) including earned income, and retain Medicaid coverage even though earnings are too high to qualify for SSI cash benefits.

The earnings limit (referred to as the "1619 (b) threshold") is based on average annual Medicaid expenditures for disabled people in each State, and thus varies from State to State and from year to year. Researchers examined SSA administrative data for the 4.1 percent of adult SSI recipients under age 50 who had earnings in 1990 (n=121,913). Researchers developed hypotheses based on the prediction that if some SSI recipients restrain earnings and employment to stay below the 1619 (b) limit, earnings of recipients should rise as the threshold rises. Four study groups and one control group were identified. To test prediction within and between groups, means were compared and the relationship between changes in the earnings threshold and changes in earnings for SSI recipients were examined. Multiple regression analysis was used to examine the changes in four variables--annual Social Security earnings, annual SSI payment, social security employment, and SSI participation. The first series examined data generated for 1990-1991. The series was then repeated for the 1990-1996 cohort.

Data from the 1993 Survey of Income and Program Participation (SIPP) and the 1994 National Health Interview Survey (NHIS) on employment and health care coverage were also examined to assess the relationship between employment, health insurance, and program participation for persons with disabilities.

Findings
The findings from the study indicate that some SSI recipients who are employed and have incomes close to the 1619 (b) threshold restrain their Social Security earnings in order to stay below the limit and remain eligible for medical benefits under Medicaid. It appears that recipients make marginal adjustments to their earnings as a result of threshold and unearned income changes, and not wholesale changes to their participation or employment status.

The analysis of the SIPP and NHIS survey data focus on characteristics of people with and without disabilities and characteristics of disability program participants and non-participants. The following are among the general findings from the surveys:

  • In general, across all categories of employment and health insurance status, persons with disabilities are older and less educated than persons without disabilities. Persons with disabilities are less likely to be high school or college graduates.
  • Persons with disabilities are more likely to be living in poverty and less likely to have incomes in excess of 300 percent above the poverty line.
  • Persons with disabilities who have health insurance are less likely to rely on private health insurance than those without disabilities; many persons with disabilities rely on Medicare and Medicaid.
  • Among the employed populations, people with disabilities are more likely to be self-employed than the non-disabled population, though rates of part-time employment are similar for the two groups.
  • Disability program participants are more likely to have severe disabilities compared to non-participants with disabilities. They are also more likely to have difficulty with activities of daily living and are more likely to have 3 or more activities of daily living (ADL) difficulties.
  • Program participants who are employed have a much higher rate of part-time employment than do employed non-participants.
  • 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 for their non-disabled counterparts, and out-of-pocket expenditures are three times greater. One study finds 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.
  • 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.

Use of Results

The 1619 (b) analyses performed for this report provide some interesting insights about the dynamic use of that program and, more generally, the dynamics of employment, earnings, and program participation of disabled adult SSI recipients. A clearer picture of the use of the 1619 (b) program could be obtained by following SSI award cohorts through their entire SSI experience. Another fruitful avenue of approach would be to analyze survey data matched to Social Security administrative data to learn more about events and conditions that precipitate program participation, and persons with significant disabilities who maintain employment. Also, new studies need to collect qualitative data from people with disabilities concerning their views on barriers to employment.

AGENCY SPONSOR: Office of the Secretary, Office of the Assistant Secretary for Planning and Evaluation

FEDERAL CONTACT: Kathleen Bond

PHONE NUMBER: 202-690-6443

PERFORMER ORGANIZATION: The Lewin Group, Fairfax, VA

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