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Health Insurance, Health Care and Labor Supply by Older Adults

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Abstract

This paper examines the effect of elective surgery receipt on Social Security Disability Insurance application and receipt amongst older adults with common chronic conditions. I use panel data from the Health and Retirement Study to follow older adults with work-limiting disabilities who develop new chronic conditions. Comparisons of patients who do and do not receive elective surgery suggest that both angioplasty and joint replacement surgery reduce the probability of applying for Social Security Disability Insurance by up to 22 percentage points and delay the age at which a respondent first claims Social Security benefits. Increasing access to medical care amongst chronically ill workers may help to reduce new SSDI applications. Findings also suggest that there are important economic effects of medical treatment intensity that should be considered in cost-effectiveness analysis.

Key Findings

  • This study finds that joint replacement surgery reduces the probability of applying for Social Security Disability Insurance (SSDI) by up to 7 percentage points and is associated with working an additional 1.3 years before receiving any form of Social Security benefits.
  • Elective angioplasty is associated with a 12 percentage point decline in the probablility of applying for SSDI and an additional 3.5 year delay before claiming Social Security benefits.
  • The study finds no relationship between receipt of either joint replacement or angioplasty and the decision to apply for SSDI.
  • Increasing access to medical care amongst chronically ill workers may help to reduce new SSDI applications.
  • Temporary benefit programs to provide income support to workers taking medical leave to receive surgery, for example, could help to reduce transitions to SSDI.
  • Reduction of elective procedure utilization in Medicare could adversely impact the health and economic outcomes of those who have chronic illnesses such as heart disease and arthritis. Cost-effectiveness analysis should factor in savings from elective procedures that prevent or delay health impairment or disability.

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Project

Paper ID

WP 2011-256

Publication Type

Working Paper

Publication Year

2011