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How Does Losing Health Insurance Affect Disability Claims? Evidence from the Affordable Care Act’s Dependent Care Mandate
- After the policy was enacted, rates of applications and awards distinctly increased in the months around the 26th birthday. SSI applications increased by 3.4 percent around age 26, compared with what would be expected if there had been no change in access to parental health insurance at that age. We also found a slightly smaller proportionate increase (2.6 percent) in SSI awards near age 26.
- Further supporting the claim that losing access to parental insurance increases SSI participation, we also found similar results when we looked at dependent-care age thresholds that were in effect in various states, before the ACA’s age-26 provision took effect nationwide. However, we found no evidence of excess applications or awards around age 26 during the pre-ACA period. Our results are also robust to a variety of specification checks.
- The spike at age 26 suggests that SSI is not the first choice for some beneficiaries who are looking for health insurance. Even while covered under a parent’s plan, young adults could still seek out SSI benefits, but some might explicitly wait until they no longer have coverage to apply. The work disincentives associated with SSI may be discouraging them from participation, or they may view Medicaid coverage less favorably than alternative private options.
We estimate the impacts of losing access to parental health insurance on Supplemental Security Income (SSI) participation, focusing on the age-26 limit for dependent coverage. We analyze the age pattern of SSI claims to develop counterfactual predictions that assume no change in access to insurance. Relative to this prediction, we find a 3.4 percent spike in SSI applications in the months immediately surrounding the 26th birthday, along with a slightly smaller increase in awards. These claims are primarily motivated by losing coverage; there might be more direct ways to address unmet insurance needs without also increasing reliance on cash payments.