Healthcare Cost-Sharing and the Economic Security of Social Security Disability Insurance Beneficiaries: Medicaid Expansion and the SSDI-Medicare Population

Although a growing literature has focused on the impact of cash benefits of Social Security Disability Insurance (SSDI), beneficiaries also eventually gain coverage by Medicare—one of the few under-65 groups eligible for Medicare. This health care coverage has significant value given the limited health insurance alternatives available to the long-term disabled given their chronic health conditions; however, original Medicare carries with it substantial cost-sharing and premiums. Dual eligibility with Medicaid has been a source of supplemental coverage for the disabled population but, prior to 2014, only for those who could satisfy Medicaid’s asset and income tests. State-level Medicaid expansions, beginning in 2014, expanded a supplemental coverage option to a broader swath of the under-65 Medicare population—beneficiaries who resided in the states that expanded Medicaid and had income under 138 percent of the federal poverty line (FPL). In this article, we rely on difference-in-differences techniques to estimate the impact of Medicaid expansion on supplemental coverage for the SSDI-Medicare population, and the subsequent effects on beneficiaries’ physician visits and health care spending. We find a statistically robust average increase in Medicaid coverage of 4.0-5.5 percentage points among SSDI-Medicare beneficiaries (an over 10 percent increase relative to baseline Medicaid coverage rates). There is substantial heterogeneity in this increase, however, with disproportionate large increases in coverage among white beneficiaries, beneficiaries with self-care or ambulatory difficulties, rural beneficiaries, and married beneficiaries without children. Although impacts on most other outcomes were statistically insignificant, we found a significant reduction in any out-of-pocket medical spending, consistent with Medicaid’s limits on cost-sharing, as well as a decrease in premiums paid by rural beneficiaries. Our findings contribute to the growing literature on the effects of Medicaid expansion, specifically in the smaller body of work examining the effects of increasing coverage on the intensive margin; it also adds to the smaller literature on the structure of health insurance coverage of the disabled-Medicare population.