Will Expanding Health Care Coverage for People with Disabilities Increase Their Employment and Earnings? Evidence from an Analysis of the Ssi Work Incentive Program

While people with disabilities often say that a loss of public health insurance is a deterrent to work, it is rare to find situations in which they might actually exhibit such a behavioral response to a change in access. Expansions in the income threshold for SSI work incentives program (Sections 1619(a) and (b)) provide an opportunity to observe such a response. Section 1619(b) allows SSI recipients to maintain Medicaid eligibility even if their income is above the level that makes them ineligible for SSI payments. If earnings increase beyond the 1619(b) threshold, however, the person loses their SSI and Medicaid eligibility. Section 1619(b) income thresholds vary significantly across states and over time. Stapleton and Tucker (2000) use the variation in Section 1619(b) income thresholds to examine the employment, earnings and program participation patterns of SSI recipients who have incomes near the threshold level for their state. They find strong evidence that many SSI recipients restrain their earnings to stay below the 1619(b) threshold. It is important to note, however, that the findings only provide evidence on the behavior of a small portion of the population with disabilities (i.e., SSI recipients who work). Nonetheless, this evidence seems to provide strong empirical support for the hypothesis that lack of access to health insurance is an important work disincentive for people with disabilities. They also find that 1619(b) participation varies significantly from month to month. Consequently, cross-sectional estimates on the share of SSI recipients participating in 1619(b) significantly understate the share of SSI recipients who ever participate. These findings are consistent with previous findings that cross-sectional estimates of employment tend to understate multi-period employment patterns for the broader population with disabilities