The Medicaid Buy-In and the Employment, Earnings, and Out of Pocket Medical Expenditures of Social Security Disability Insurance Beneficiaries

by Melissa McInerney, College of William and Mary

There have been several efforts to increase workforce integration of Social Security Disability Insurance (DI) recipients. Evaluations of such programs tend to find modest effects, suggesting that these efforts do not lead to desired workforce integration. One smaller program has largely been overlooked in this literature, the Medicaid Buy-In program for working adults with disabilities. This Medicaid Buy-In program effectively raises the Medicaid income threshold for disabled workers, and the existing descriptive evidence is consistent with Buy-In programs increasing both employment and earnings. Over 70 percent of Buy-In participants also receive DI; this is likely because the Buy-In program provides Medicaid benefits that are desirable to DI beneficiaries. Medicaid covers many services that Medicare does not, and these services are especially crucial to individuals with disabilities. In the proposed project, I will use restricted use individual-level data from the Health and Retirement Study (HRS) and the Medicare Current Beneficiary Survey (MCBS) to examine whether state implementation of a Medicaid Buy-In program effectively increases employment and earnings—and decreases out of pocket medical expenditures—for DI recipients. States enacted Medicaid Buy-In programs at different times, and I exploit this state by year variation in implementation dates to determine whether Buy-In programs improve these outcomes. These findings will provide important preliminary evidence for a broader research agenda examining whether the Medicaid Buy-In program meets the policy goals of increasing workforce integration and reducing burdens on the DI program.

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