Disability: Economic Costs and Insurance Protection

By the broadest definitions of disability—being limited in an activity due to a chronic health condition—about 15 percent of the noninstitutionalized population in the United States is disabled. The disabled are on average less economically well off than the nondisabled. La-Plante et al. report that 27.3 percent of persons in families with incomes below $10,000 report some activity limitation, compared to only 9 percent of those in families with incomes of $35,000 or more. If disability is defined as the inability to perform a major life activity, the respective percentages are 10.6 and 1.8. The relationship between lower economic status and having at least one chronic condition is found at all ages, over time, and across nations Older individuals with at least one of the major chronic conditions (heart disease, depression, asthma, hearing loss, arthritis, diabetes) have lower incomes and fewer assets than comparably aged individuals without those conditions. (Alzheimer's disease, more highly correlated with age than other conditions, stands alone as a chronic condition whose incidence is not correlated with economic status.)

There are two possible, not mutually exclusive, explanations for the persistent relationship between disability and economic status. Chronic conditions that occur independently of economic status are likely to lead to lower income due to subsequent reductions in work and earnings, and the higher out-of-pocket costs for medical and physical care. Persons age sixteen to sixty-four with a work-related disability less likely than the nondisabled to be either working or looking for work. Those who work are more likely to work part-time and, even if they do work full-time, to have lower earnings (Kaye). On the other hand, low income may lead to a higher incidence of chronic conditions because limited resources reduce access to medical care, in part because of the inability to pay the out-of-pocket costs of care. Even preventive lifestyle changes (e.g., weight and cholesterol management through better diet, regular exercise regime, smoking cessation program) are less likely because these require resources and social support.

Chronic and Disabling Conditions, published by the National Academy for an Aging Society as part of its Public Policy and Aging Report series, documents three important aspects of chronic conditions that influence the relationship between disability and economic status later in life.

• • Early life chronic conditions have subsequent effects on economic status because young persons with chronic conditions miss more school than their healthy peers, thus slowing their educational achievements and consuming parental resources that might otherwise be spent on children's education.
• • The most prevalent chronic conditions among the older population (e.g., depression, asthma, hearing loss, and heart disease) can be managed effectively with medication, therapy, and changes in lifestyle. However, the lower social and economic support associated with these chronic conditions limits the ability to obtain appropriate treatment, and the earlier the onset, the more likely are they to slow the accumulation of financial resources to pay for medical care and necessary lifestyle changes.
• • Caregiving at home disrupts employment and leisure activities of family members. It is estimated that U.S. businesses lose $33 billion a year due to lost productivity and absenteeism of caregivers. Adding to the time commitments of care are the out-of-pocket costs for care.