Understanding the Growth in Federal Disability Programs: Who Are the Marginal Beneficiaries, and How Much Do They Cost?

Abstract

SSI and SSDI, the two work disability programs administered by the Social Security Administration (SSA), have been marked by concerns about target efficiency since their inception. This study uses SSA administrative data linked with National Health Interview Survey data (NHIS) to examine health status, labor force participation at time of NHIS interview, and linked mortality data to examine mortality during the period following NHIS interview. The self-reported health status data present two strong and consistent patterns: denied applicants report being in considerably worse health than non-applicants, and beneficiaries appear to be sicker yet. In logit models among disability beneficiaries, women are significantly less likely to report excellent/very good health, but race has no significant effect. While being female decreased the probability of good health, it has no significant effect on the probability of reporting no work limitation at time of interview among beneficiaries. Although race was not significant in the model of self-reported health, both Hispanics and non-Hispanic blacks are significantly more likely to report no work limitation at time of interview. This study has important limitations. NHIS respondents who link to the SSA administrative data may not be representative of all individuals with disability application histories. In addition, individuals must live long enough after disability determination to be drawn into an NHIS sample, and these results reflect the experience of that subsample of disability applicants who do not die during the determination process or soon thereafter.