3 minute read

Disability: Economic Costs and Insurance Protection

Health Care Cost Coverage

Disability presents an additional disadvantage for security in retirement in that it is likely to be associated with extraordinary (compared to nondisabled individuals of the same age) medical care expenses and to require costly physical care that a nondisabled retiree does not face. If these additional expenses were incurred during working years but were not covered by health insurance, the individual's ability to save for retirement would have been further limited. When other family members provide unpaid services, these added responsibilities may reduce the care-taker's market earnings, and consequent savings that the disabled individual could share in retirement. Further, disabled workers not covered by employer-provided health insurance are forced into the individual insurance market, where coverage may be denied, premiums may be higher because of their greater health risks, or coverage may be limited by preexisting condition clauses.

Health insurance is important for the treatment and management of chronic conditions; its absence may contribute to the association between chronic conditions and economic status. SSDI beneficiaries are covered by Medicare following 24 consecutive months of benefit receipt. These individuals may purchase "Medigap" insurance, although out-of-pocket costs for these supplementary policies may limit purchase. Clearly, health insurance coverage is important to the treatment of chronic conditions, yet health insurance coverage is less likely among the disabled than among their healthy peers. Absence of coverage reduces the probability of effective treatment and management of work-limiting chronic conditions. Consider two of the most common chronic conditions among the elderly: arthritis, affecting almost half of all elderly people in the United States, and hearing loss, affecting 22 million people. Among persons between the ages of forty-five and sixty-four with arthritis, only 46 percent have private insurance, compared to 80 percent of those without arthritis. Hearing loss can be effectively treated with hearing aids, yet two out of three persons who are sixty-five or older and have hearing loss do not use hearing aids, in part a consequence of Medicare not covering hearing aids.

KAREN HOLDEN

See also AMERICANS WITH DISABILITIES ACT; EMPLOYMENT OF OLDER WORKERS; FUNCTIONAL ABILITY; JOB PERFORMANCE; RETIREMENT, DECISION MAKING; RISK MANAGEMENT AND INSURANCE; SOCIAL SECURITY, HISTORY AND OPERATIONS.

BIBLIOGRAPHY

BERKOWITZ, M. "Linking Beneficiaries with Return-to-Work Services." In Disability: Challenges for Social Insurance, Health Care Financing and Labor Market Policy. Edited by Virginia Reno, Jerry Mashaw, and Bill Gradison. Washington D.C.: National Academy of Social Insurance, 1997. Pages 41–83.

BOUND, J. "The Health and Earnings of Rejected Disability Insurance Applicants." American Economic Review 79, no. 3 (1989): 482–503. HAVEMAN, R.; HOLDEN, K.; WOLFE, B.; SMITH, P.; and WILSON, KATHRYN. "The Changing Economic Status of U.S. Disabled Men: Trends and Their Determinants, 1982–1991." Empirical Economics 24 (1999): 571–598.

HAVEMAN, R., and WOLFE, B. "Disability Transfers and Early Retirement: A Causal Relationship?" Journal of Public Economics 24, (1984): 47–66.

HAVEMAN, R.; DEJONG, P.; and WOLFE, B. "Disability Transfers and the Work Decisions of Older Men." Quarterly Journal of Economics 106 (1991): 939–949.

HAVEMAN, R.; WARLICK, J.; and WOLFE, B. "Labor Market Behavior of Older Men: Estimates from a Trichotomous Choice Model." Journal of Public Economics 36 (1988): 153–175.

HOLDEN, K. "Chronic and Disabling Conditions: The Economic Costs to Individuals and Society." Public Policy and Aging Report 11, no. 2 (2001): 1–6.

KAYE, H. S. Is the Status of People with Disabilities Improving? Disability Statistics. Abstract no. 21. San Francisco: Disability Statistics Center, University of California at San Francisco, 1998. Also available at www.dsc.ucsf.edu/UCSF and www.ed.gov

LAPLANTE, M. P.; CARLSON, D. H.; KAYE, S.; and BRADSHER, J. E. Families with Disabilities in the United States. Disability Statistics. Report no. 8. San Francisco: Disability Statistics Center, University of California at San Francisco, 1996. Also available at www.dsc.ucsf.edu/UCSF

LEONARD, J. "Labor Supply Incentives and Disincentives for Disabled Persons." In Disability and the Labor Market: Economic Problems, Policies, and Programs. Edited by M. Berkowitz and M. A. Hill. Ithaca, N.Y.: Industrial and Labor Relations Press, 1986.

National Academy for an Aging Society. "Challenges for the 21st Century: Chronic and Disabling Conditions." www.agingsociety.org

YCAS, M. A. "Patterns of Return to Work in a Cohort of Disabled-Worker Beneficiaries." In Disability, Work and Cash Benefits. Edited by Jerry L. Marshaw. Kalamazoo, Mich.: W. E. Upjohn Institute for Employment Research, 1996.

Additional topics

Medicine EncyclopediaAging Healthy - Part 1Disability: Economic Costs and Insurance Protection - The Economics Of Disability, Work Withdrawal By Older Disabled Workers, Disability Insurance: General Policy Features