Public Health Insurance and SSI Program Participation Among the Aged

37 Pages Posted: 19 Feb 2008

See all articles by Todd E. Elder

Todd E. Elder

Michigan State University

Elizabeth T. Powers

University of Illinois at Urbana-Champaign

Date Written: May 2006

Abstract

Previous researchers have noted that the 'categorical' Medicaid eligibility accompanying the welfare programs Aid to Families with Dependent Children (AFDC) and Supplemental Security Income (SSI) often far exceeds the value of these programs' cash benefits. It may be the case that the accompanying health insurance, not the cash benefit, is often the decisive factor in welfare participation. If so, welfare participation should decrease when cash and health insurance benefits are unbundled. We present a simple model of program participation with heterogeneous valuation of health insurance and transaction costs of participation. We evaluate the following four implications of the model: 1) SSI participation declines with the expansion of alternative routes to Medicaid (i.e., non-categorical Medicaid); 2) the availability of non-categorical Medicaid increases Medicaid participation among SSI nonparticipating eligibles; 3) the average SSI benefit collected by welfare recipients is higher when non-categorical Medicaid is available; and 4) the average SSI benefit rejected by nonparticipating SSI eligibles is higher when non-categorical Medicaid is available. Overall, the findings on the model's testable implications are mixed. The estimates imply strikingly large effects of the presence of alternative routes to Medicaid on both SSI and Medicaid participation, but the results for the hypotheses about SSI benefit amounts are sensitive to controls for recipient characteristics.

Suggested Citation

Elder, Todd E. and Powers, Elizabeth T., Public Health Insurance and SSI Program Participation Among the Aged (May 2006). Michigan Retirement Research Center Research Paper No. WP 2006-117, Available at SSRN: https://ssrn.com/abstract=1094961 or http://dx.doi.org/10.2139/ssrn.1094961

Todd E. Elder (Contact Author)

Michigan State University ( email )

110 Marshall-Adams Hall
Department of Economics
East Lansing, MI 48824
United States
517-355-0353 (Phone)

Elizabeth T. Powers

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

HOME PAGE: http://https://netfiles.uiuc.edu/epowers/www/

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