Is Medicaid expansion reducing disability claims?

The number of Americans applying for Supplemental Security Income (SSI) benefits dropped in the first six months of this year compared to the same period last year, and experts are debating whether the decline is partly related to the healthcare reform law’s Medicaid expansion to low-income adults.

A total of 1,189,567 SSI claims— most related to physical or mental disability—were filed in the first six months of 2014, compared with 1,330,169 during the same period last year, a drop of 10.6%, according to data obtained by Modern Healthcare from the Social Security Administration through a Freedom of Information Act request. The total decline in SSI claims in states that expanded Medicaid in the first six months of 2014 was 11.2%, compared with 10.0% in non-expansion states.

At the same time, the unemployment rate across the U.S. dropped as well, falling 1.1% between June 2013 and June 2014. The average rate of the decrease was the same in Medicaid-expansion and non-expansion states.

The reason some experts say expanding Medicaid to childless adults up to 138% of the federal poverty level may have reduced SSI claims is because qualifying for SSI benefits automatically makes a person eligible for Medicaid in 39 states. It’s thought that one major reason people apply for SSI is to receive Medicaid coverage. But with the Medicaid expansion to low-income adults this year under the Patient Protection and Affordable Care Act, those in expansion states no longer have to apply for SSI to get Medicaid. In addition, experts say that being able to access medical and behavioral care through Medicaid coverage may make it possible for people with disabilities to stay in the workforce.

“People turn to SSI when they are desperate—no work, no income, no insurance,” said David Autor, an economics professor at Massachusetts Institute of Technology. “If Medicaid takes care of their medical costs, they may be able to continue seeking work or working at low wages.”

In addition, if expanding Medicaid drives down SSI claims, that could save states money, because the federal government picks up a much higher percentage of the tab for Medicaid coverage obtained under the ACA expansion than it does for beneficiaries who enroll through SSI.

But other observers say the improving U.S. economy is responsible for the dip in SSI-claim applications, not Medicaid expansion. “It’s not clear to me that the drop in claims is because of Medicaid,” said Joseph Antos, a healthcare economist with the American Enterprise Institute, which opposes the Affordable Care Act. “Obviously 2014 is better than 2013 because the economy is improving.”

The Medicaid-expansion states showing the steepest drops in disability claims were North Dakota (19.9%), Rhode Island (18.5%), Arkansas (16.8%), West Virginia (17.6%) and Kentucky (15.0%). The non-expansion states showing the sharpest SSI-claim drops were Wyoming (19.2%), Nebraska (17.1%), Maine (16.8%) and Idaho (15.1%). Michigan, with a 19.9% drop in SSI claims, expanded its Medicaid program effective April 1, 2014.

The data show that 68% of expansion states that expanded Medicaid starting Jan. 1, 2014 had percentage declines in disability claims greater than 10%, whereas 50% of the non-expansion states had declines greater than 10%.

Some legislators in expansion states say they are pleased that Medicaid expansion may have played a role in reducing disability claims. “With Medicaid expansion, we are seeing people who are getting their health into compliance and are actually able to get back into the workforce,” said Barbara Sears, a Republican state representative in Ohio who supported her state’s expansion.

SSI is a needs-based federal program funded by general revenues that provides monthly cash benefits for people who are age 65 or older, blind, or disabled. About 8.1 million Americans received monthly benefits in 2013, up nearly 20% from a decade ago, according to the Social Security Administration. Of those who got SSI in 2013, nearly 7 million people received payments because of a disability. Federal spending on the SSI program in 2013 totaled $53.4 billion, up from $51.7 billion in 2012. State expenditures for SSI have held steady at $3.3 billion for the last few years.

Federal law generally requires states to extend Medicaid to SSI recipients. But the law allows states to establish their own eligibility requirements, and 11 states require people to apply separately for SSI and Medicaid.

Some experts caution that the drop in SSI claims would have to continue for several years at a greater pace in expansion states than non-expansion states to demonstrate that Medicaid expansion was the likely cause of the decline.

Arkansas State Sen. Jonathan Dismang, a Republican who supported Medicaid expansion, said he hoped that expanding Medicaid would reduce the number of people in the SSI program. “It’s too early to say with any certainty that’s the case,” he said. “I think there’s an indication there has been an impact.”