Social Security

There is considerable policy concern about "DI lock"—that tying public health insurance coverage to cash disability benefit receipt contributes to the low exit rates due to work. This concern led Congress to institute continued health insurance eligibility after disability beneficiaries leave the cash-benefit rolls for work-related reasons. However, unlike the long literature on "job lock," the importance of the DI lock hypothesis—either before or after these extensions—has remained unquantified.
This paper tests whether a "perceived DI lock" remains among disability beneficiaries, and whether state health insurance policies help alleviate the problem and encourage work among beneficiaries. The analysis includes both DI and SSI beneficiaries, and tests if there are differential patterns between the two programs. We exploit state variation in the access and cost of health insurance, caused by regulation of the non-group market, the existence of Medicaid buy-in programs, and Medicaid generosity, as well as detailed disability and health insurance program interactions. While overall we find little evidence of any persistent DI-lock, heterogeneity is very important in this context. Our estimates suggest that increasing health insurance access does increase the likelihood of positive earnings among a subset of disability beneficiaries. We find evidence of SSI lock among beneficiaries with some Medicaid expenditures, and that both non-group health insurance regulation and generous Medicaid eligibility help alleviate the problem. We find evidence of remaining DI lock among individuals who do not have access to supplemental health insurance outside of Medicare. Medicaid buy-in programs alleviate the remaining DI lock.

In economic downturns prior to the Great Recession, workers over age 50 had escaped relatively unscathed. But the unemployment rate for older workers soared to record highs during the Great Recession. This paper projects how older workers will fare across a broad set of financial outcomes over the remainder of this decade. The model estimates how these outcomes differ between individuals who remained employed and those who were displaced during the recession, controlling for their demographic characteristics. We also seek to determine whether there is any variation in their financial outcomes based on the nature of their layoffs—mass versus individual layoffs—and whether labor market conditions played a role in these outcomes. First, the results show that displaced workers are projected to be significantly worse off: their earnings are 14–19 percent lower over the remainder of this decade, financial assets are 22–30 percent lower, and they are up to 8 percent more likely to experience another layoff. Projections also indicate that older Americans will continue to feel the effects of the Great Recession and that labor force participation, earnings and financial assets all will be lower than they would have been after a milder recession like the one in 2001–2003. Second, although the model allows for differences in the nature of layoffs and in local labor market conditions, there is neither evidence that workers subject to mass layoffs are of higher average quality nor evidence that outcomes are worse in locations hit by more severe recessions.