Recent Trends in Disability and the Implications for Use of Disability Insurance

Timothy A. Waidmann, HwaJung Choi, Robert Schoeni and John Bound
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Timothy A. Waidmann: Urban Institute
HwaJung Choi: University of Michigan
John Bound: University of Michigan

Working Papers from University of Michigan, Michigan Retirement Research Center

Abstract: The health of the working-aged population is a key driver of enrollment in and spending by the two most important federal disability programs, Social Security Disability Insurance (DI) and Supplemental Security Income (SSI). Recent studies have found that some dimensions of the population’s health approaching retirement age have worsened relative to earlier cohorts. Other things equal, these unfavorable health trends would be expected to cause both applications and disability awards to increase and portend fiscal challenges for DI and SSI. Using two nationally representative surveys, this study examines the health trends of adults ages 51 to 61 between the mid-1990s and the mid-2010s and finds updated evidence confirming prior conclusions of unfavorable trends. It then summarizes the likely effect of these unfavorable health trends on the demand for DI and SSI benefits by simulating the effect on applications and awards of observed health changes over time while holding constant other factors likely to affect DI/SSI use. These estimated effects suggest an increase in demand for disability benefits due to worsening health of 9 to 16% for men over the 20-year period depending on the age group and survey. Estimated effects of health trends on DI/SSI for women were not significant. If these trends for men continue, they may require adjustments in planning for the future of important social insurance programs.

Pages: 29 pages
Date: 2019-10
New Economics Papers: this item is included in nep-age and nep-ias
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