Who Becomes Disabled During Recessions? Evidence from Medicare

Recent research on the Social Security Disability Insurance (DI) program has documented an increase in the share of the working age population receiving DI income and a negative relationship between economic conditions and applications for DI benefits driven by changes in both demographic factors and changes in the propensity to apply for benefits (Autor and Duggan, 2003; Liebman, 2015). If decreased economic prospects make moderately impaired individuals more likely to apply for DI, then those who first claim DI in bad economic times should be healthier than those who claim in better times. This paper uses the fact that DI recipients become eligible for health insurance through Medicare two years after DI eligibility to directly investigate the relationship between local economic conditions at the time of disability onset and health. Using claims data for DI recipients enrolled in fee-for-service Medicare between 1992 and 2013, we will examine beneficiaries’ healthcare utilization (e.g., spending) as well as the prevalence and progression of conditions such as musculoskeletal and mental disorders, which have become more common causes of disability in recent years. The results of this study will shed light on the health and healthcare use of DI beneficiaries, geographic variation in causes of disability, trends in incidence, prevalence and severity of various causes of disability, and the relationship between DI incidence and labor market conditions.