Why did the SSI-disabled program grow so much? Disentangling the effect of Medicaid

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22 Scopus citations


The number of participants in the SSI program grew by 1.1 million from 1987 to 1993. This paper examines the role of Medicaid on the SSI participation decision. I use the rapid growth in average Medicaid expenditure as a proxy for its value. OLS estimates of Medicaid's effect may be biased because of omitted variables bias and measurement error. I therefore apply two-stage least squares to estimate Medicaid's effect, using average Medicaid expenditure for blind SSI recipients as an instrument. These estimates show that rising Medicaid expenditure significantly increased SSI participation among adults with low permanent incomes, explaining 20% of the growth.

Original languageEnglish
Pages (from-to)321-349
Number of pages29
JournalJournal of Health Economics
Issue number3
StatePublished - Jun 1998

Bibliographical note

Funding Information:
Work on this paper was supported by the Office of the Assistant Secretary for Planning and Evaluation in the US Department of Health and Human Services, the Social Security Administration, and the National Institute on Aging. I am grateful for helpful comments and encouragement from Joshua Angrist, Rebecca Blank, Janet Currie, David Cutler, Leora Friedberg, Jonathan Gruber, Hilary Hoynes, Wei-Yin Hu, Jacob Klerman, Caroline Minter Hoxby, Steven Levitt, Jorn-Steffen Pischke, James Poterba, Douglas Staiger, David Stapleton, Duncan Thomas, Barbara Wolfe, two anonymous referees, editor Joseph Newhouse, and participants at National Bureau of Economic Research and the Social Security Administration. Gloria Chiang provided excellent research assistance. The STATA programs and data used in this study may be obtained from the author.


  • Disability
  • Medicaid
  • Supplemental security income
  • Welfare

ASJC Scopus subject areas

  • Health Policy
  • Public Health, Environmental and Occupational Health


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