Working Paper: NBER ID: w25564
Authors: Philip Armour; Claire Ohanlon
Abstract: A substantial portion of the costs associated with, and the value to beneficiaries of, Social Security Disability Insurance is Medicare eligibility. However, the benefits of this eligibility can vary due to differences in state policies on supplemental Medicare coverage, also known as Medigap. Although Medigap policies are federally regulated to be issued to 65-and-over Medicare beneficiaries with specific restrictions over underwriting, these policies are left to states to regulate with regard to the under-65 SSDI population, generating substantial cross-state and temporal variation. This paper documents the variation in availability and generosity of under-65 Medigap eligibility for the SSDI population. Furthermore, it exploits this variation to provide initial estimates of how this eligibility affects the health status of non-Medicaid-eligible SSDI recipients. Our main finding is that requiring Medigap plans be offered for under-65 SSDI recipients substantially improves self-reported health of this population, with suggestive evidence that this improvement is stronger as underwriting restrictions increase and among SSDI beneficiaries with mental health conditions. The estimated effect is highly robust to alternative scaling or categorizations of self-reported health, choice of data set, inclusion of fixed effects, controls for local Medicare Advantage penetration, and falsification tests. This effect is nearly three times the size of the estimated increase in self-reported health in the Oregon Medicaid expansion.
Keywords: Medicare; SSDI; Medigap; Health Insurance; Health Outcomes
JEL Codes: I13; H51; H55; J14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Medigap policies requiring plans to be offered to SSDI recipients (I18) | self-reported health (I10) |
| Medigap policies requiring plans to be offered to SSDI recipients (I18) | self-reported health improvement particularly pronounced among beneficiaries with mental health conditions (I14) |
| Medigap policies requiring plans to be offered to SSDI recipients (I18) | self-reported health improvement stronger in states with guaranteed issue requirements (I13) |
| Medigap policies requiring plans to be offered to SSDI recipients (I18) | self-reported health improvement stronger in states with open enrollment periods (I14) |
| Medigap policies requiring plans to be offered to SSDI recipients (I18) | health outcomes for under-65 Medicare beneficiaries (I18) |
| Medigap policies requiring plans to be offered to SSDI recipients (I18) | health improvement larger than in Oregon Medicaid expansion study (I18) |