Showing papers on "Disability insurance published in 1987"

The cost of disability.

Abstract: Approximately 16.5% of the adult population in the United States is disabled. About half of the disabled are severely limited and unable to work regularly. Musculoskeletal disorders are the most frequent type of disability. In the United States, there are three major types of disability insurance: Social Security Disability Insurance (a federal program), Workers' Compensation Insurance (usually a state-regulated program), and private health insurance. Recent years have seen a greater demand for private long-term disability insurance, as the trend increases toward less than total reliance on public programs to support disabled workers. The most recent statistics available indicate that Social Security Disability Insurance benefits are currently about $16.8 billion per year; workers' compensation benefits, $16.1 billion; and private disability income protection benefits, $5.2 billion. These figures add up to almost $40 billion in insurance costs. However, insurance costs are only part of the total cost because not everyone is covered by insurance, and insurance does not cover all disabilities. Disability can never be totally prevented or eliminated, but disability and its costs can be substantially reduced through more effective treatment and rehabilitation, including patient education and vocational rehabilitation.

The Effects of Social Security on Life Insurance Demand by Married Couples

Abstract: The paper develops a simple one period, utility maximizing model of a married couple choosing the amount of life insurance it wants on each of its earners. The model is specialized to predeceasing husbands and tested using income tax and probate data on a sample of Wisconsin households. Husband's future earnings are found to increase the demand for insurance on the husband's life. Social Security survivor benefits decrease this demand, while Social Security benefits conditional on the husband's survival, such as retirement benefits, increase it. These two effects largely offset one another. Wives' future earnings are found to increase the demand for life insurance on the husband, contrary to the model's prediction. While life insurance planning often includes discussion of Old Age, Survivors, and Disability Insurance, more popularly known as Social Security, existing life insurance models do not adequately consider the effects of both Social Security retirement and survivor benefits on life insurance demand.1 Survivor benefits diminish the demand for life insurance, while retirement benefits increase it. This paper develops and empirically investigates this hypothesis in a simple model that distinguishes these two effects. The overall effect of Social Security on life insurance bears on the more frequently asked question about the effect of Social Security on bequests, since life insurance is a key tool in bequest planning.2 The paper models a household with two potential earners, and also investigates the role of a spouse's earnings in determining insurance demand. Members of a household can share risks, so that the potential future earnings John Fitzgerald is an Assistant Professor in the Bowdoin College Department of Economics. He earned a Ph.D. at The University of Wisconsin-Madison. 'For example [3] and [20] consider "income programming" models for life insurance demand where only Social Security survivor benefits are considered. Campbell [5] also neglects retirement benefits. 2The effect of Social Security on bequests remains an unsettled question. In a seminal paper, Barro [2] argued that an unfunded, or "pay as you go", Social Security system should have no effects on aggregate savings, since parents will adjust their bequests to offset any burden the system puts on their children. David and Menchik [8] empirically test this hypothesis using data on actual bequests, and find no significant effect of net Social Security wealth on bequests. For a review of the vast literature on the effect of Social Security on savings, see [6]. This content downloaded from 157.55.39.144 on Wed, 07 Sep 2016 04:37:31 UTC All use subject to http://about.jstor.org/terms The Effects of Social Security on Life Insurance 87 of one spouse can reduce the need for life insurance on the other. Given the rise in the number of two earner couples in the United States, the role of the spouse's earnings has become increasingly important. This paper develops a simple one period model of a household (a married couple) choosing the amount of life insurance it desires on each of its two potential earners. The approach is similar to Campbell [5] who solved a single earner problem. An explicit utility maximization model is used where either earner may die during the planning period. The model assumes that two Social Security wealth measures are relevant: the Social Security wealth available to the family conditional on an earner, say the husband, surviving the planning period, and the Social Security wealth available to the surviving family conditional on the husband dying during the planning period. These two meassures have offsetting effects on life insurance demand: the wealth conditional on the husband's survival increases the demand for life insurance, much like the husband's future earnings, while wealth conditioned on the husband's death (survivor benefits) reduces the demand for life insurance. Since these effects move in opposite directions, the total (unconditional) effect of Social Security wealth on life insurance demand is indeterminate. This paper measures the degree of offset empirically. The remainder of this section briefly reviews past empirical work on life insurance demand. The next section describes a model of household behavior. The rest of the paper empirically investigates the implications of the model. Section II describes the empirical method, including the data used and calculation of the components of household wealth. Section III presents empirical results, and a brief conclusion follows. Several past studies have looked at the total household expenditure on life insurance premiums, and found that household income and wealth have positive effects on premium expenditures.3 Interestingly, Duker [9] found that working wife households have lower total premium expenditures than households in which the wife does no market work. While he terms this "underconsumption of insurance," this paper's model shows this to be rational sharing of risk within the household. To this author's knowledge, only one other study has empirically investigated the effect of Social Security on life insurance demand.4 In a framework similar to that used below, Campbell [4] finds that a person's aggregated future earnings have a moderate positive effect on the total insurance held on that person, while aggregated Social Security survivor benefits have a moderate negative effect.5 He ignores Social 'Most of these studies use data from various years of the Survey of Consumer Finances from the Survey Research Center at Michigan. They include [18] [17] [15] and [9]. 4Two other studies, [1] and [11], look at life insurance purchases over a specified period of time for households, and the type of insurance purchased. Neither study considers Social Security. 'Campbell uses data gathered during 1963 and 1964 from the Survey of Financial Characteristics of Consumers and the Survey of Changes in Family Finances. He imputes Social Security benefits based on earnings, age, and family size. This content downloaded from 157.55.39.144 on Wed, 07 Sep 2016 04:37:31 UTC All use subject to http://about.jstor.org/terms 88 The Journal of Risk and Insurance Security retirement benefits, and studies only single earner households, thus ignoring the potential for risk sharing.

Job Retention Among People with Multiple Sclerosis

Abstract: This article reports the results of a survey using a self-report instrument to assess how job retention among multiple sclerosis (MS) patients is affected by functional impairment, symptom severity, demographic characteristics, and the potential disincentives of savings and investments, income from a spouse, social security disability insurance (SSDI), and supplemental security income (SSI). A mail survey of New York City MS Chapter members resulted in the collection of questionnaires from 439 individuals who had been employed at diagnosis and were not currently retired. Perceived symptom severity, functional impairment, and demographic characteristics together accounted for 31% of the variance in job retention. When all other variables were controlled for, SSDI and SSI acted as disincentives, accounting for 12% of the variation in work status. When SSDI was removed from the equation, the amount of variance accounted for was reduced to 37%, with income from a spouse accounting for 5% of the variation amon...

Economic policy, intergenerational equity, and the Social Security Trust Fund buildup.

Abstract: For the next 75 years, the Old-Age, Survivors, and Disability Insurance (OASDI) system is projected to be close to in balance, on average. For approximately the next 40 years, under current projections, the combined OASDI Trust Fund is expected to continually have excesses of income over outgo, creating a buildup that will peak in 2030 at about +12 1/2 trillion (roughly 23 percent of the gross national product). Thereafter, the system is projected to be in annual deficit continually until the trust fund is exhausted in 2051. This article focuses on two fundamental issues that must be understood if the potential economic consequences of this buildup are to be evaluated properly. The first issue deals with the fact that the nature of Federal economic policy during the buildup period will determine the ultimate economic impact of the buildup. The second issue concerns the effect of the buildup, and its disposition, on the Social Security program's treatment of one generation of workers compared with another. If a fund is actually accumulated as projected, part of the retirement benefits of the "baby-boom" generation will, in effect, be self-financed. If, however, that fund is used for other purposes--directly or indirectly--future cohorts of workers will be required to fully finance benefits promised to the baby-boom retirees.

Medicare utilization by disabled-worker beneficiaries: a longitudinal analysis.

Abstract: Medicare eligibility for Social Security disabled-worker beneficiaries begins after 2 years of cash benefit receipt. Extension of the current coverage is often proposed as a way to encourage beneficiaries to return to work. Little is known, however, about the long-run Medicare costs for the disabled and how costs vary by demographic and health characteristics. This article describes Medicare utilization and reimbursement amounts for 1974-81 for a cohort of disabled-worker beneficiaries under age 62 and first entitled to cash benefits in 1972. The data come from a first-time linkage of Disability Insurance program data with data on Medicare utilization. The tables provide a detailed look at several factors that are associated with variation in Medicare costs among beneficiaries and over time.

Work values of disabled beneficiaries.

Abstract: Although disabled beneficiaries are not expected to work, do they continue to value work? This article compares data on a particular concept of work values, the importance to the self of having a job, for social security disability insurance beneficiaries, other disabled persons, and nondisabled persons interviewed in the Social Security Administration's 1978 Survey of Disability and Work. Descriptive comparisons of these three groups with similar demographic characteristics indicates that belief in the importance of a job does not decline after entitlement to disability insurance benefits. The findings support current efforts to promote re-employment through work-incentive and vocational rehabilitation policies.

Income of new disabled-worker beneficiaries and their families: findings from the New Beneficiary Survey.

Abstract: In 1982, disabled workers who came on the social security disability insurance rolls from mid-1980 to mid-1981 had median monthly incomes of less than $500 if they were unmarried and less than $1,300 if they were married. These median monthly income levels, which include the income of a spouse and minor children if present, are roughly half those of the noninstitutionalized population aged 25-64. Social security benefits are the most important source of income for disabled workers and their families: They account for 40 percent of the total family income of married disabled workers and 65 percent of the total income of unmarried disabled workers. Social security benefits provide at least half of all income for more than 80 percent of unmarried disabled-worker beneficiaries and for 50 percent of the married beneficiaries. For married disabled-worker beneficiaries, earnings of the spouse are the second most important income source. Spousal earnings account for 28 percent of total income. Pensions and asset income each account for about 10 percent of total income for these married beneficiaries. Earnings are not an important source of income for unmarried disabled-worker beneficiaries for whom they amount to only about 3 percent of total income. Pensions, asset income, and public transfers each account for about 10 percent of total income of the unmarried beneficiaries.

Actuarial status of the OASI (old age survivors insurance) and DI (disability insurance) Trust Funds.

Abstract: This article summarizes the current financial condition and actuarial status of the Old-Age, Survivors, and Disability Insurance (OASDI) program, as shown in the 1987 Annual Report of the Board of Trustees The Trustees note that the assets of the OASI and DI Trust Funds, on a combined basis, will be sufficient to permit the timely payment of OASDI benefits for many years into the future, on the basis of all four sets of assumptions shown in the report For the next 75 years, the estimates show that the OASDI program, overall, is in close actuarial balance, based on the two intermediate sets of assumptions The DI program by itself, however, is not in close actuarial balance for the next 75 years The actuarial deficit for the DI program could be remedied by a small reallocation of the contribution rate from OASI to DI, in such a way that the OASI program would remain in close actuarial balance and OASDI benefits would not be affected Although the Trustees are not recommending such a reallocation, they note that the financial condition of the DI program will need to be carefully monitored

Practitioner fraud and abuse: a public policy status report.

Abstract: In summary, a public policy to get rid of practitioner fraud and abuse has been established. It resulted initially from the changing attitude of the electorate on spending for social as well as health service programs. It is reflected by the congressional enactment of new laws against practitioner fraud and abuse, i.e., the Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1977 and the Civil Money Penalties Law of 1981. It has been implemented through the prosecution of numerous practitioners involved in fraudulent activities and abuses using the new laws as well as many others, including the False Claims Act of 1963 and the fraud penalties codes recognized under the Federal Old Age, Survivors and Disability Insurance Act. The ultimate success of this public policy, however, will certainly depend, at least in part, on our ability to obtain an objective and realistic analysis of the degree of fraud and abuse in these programs, as well as to define the characteristics of "Medical Mills" and to determine to what extent they still exist. Finally, if this public policy is to mature, it must follow a path that assures that we do not disrupt or hamper the delivery of health care services to our poor and elderly populations through the needless introduction of regulatory requirements or legal excesses.