Eliminating the
Medicare Waiting
Period for Social
Security Disabled-
Wcyrker Beneficiaries
by Barry V. Bye and
Gerald F. Riley*
Medicare eligibility for Social Security Disability Insurance
beneficiaries begins no earlier than 24 months after entitlement to
cash benefits. The original purposes of the 24month waiting period
were to limit costs to the Medicare trust funds at a time when many
workers might have other health insurance coverage and to ensure
that Medicare protection is extended only to persons whose
disabilities are severe and long lasting. Some policymakers have
advocated shortening or eliminating the waiting period to improve
access to medical services and to alleviate the burden of
very high medical expenses.
Using a unique file of longitudinal data from Social Security and
Medicare records, Medicare costs during the waiting period have
been estimated for a randomly selected cohort of 18,782 disabled-
worker beneficiaries first entitled to disability benefits in 1972. The
estimates suggest that the lo-year cost to Medicare of this cohort
would have increased by about 45 percent if the waiting period had
been eliminated and if Medicare were the primary payer during that
time. Thirty percent of the increase in expenses would have been
for persons who died within 2 years of entitlement to disability
benefits.
Data from the New Beneficiary Survey indicate that in 1982
about
27 percent of disabled-worker beneficiaries had no health insurance
coverage in the last 6 months of their waiting period. These
beneficiaries and others without insurance who died in the first 18
months of eligibility for Disability Insurance would benefit the most
from elimination of the waiting period. Other data show that
providing timely Medicare coverage might be difficult for some
beneficiaries because of the retroactive nature of many disability
program entitlements.
*Barry Bye is with the Office of Research and Statistics, Office of Policy,
Social Security Administration. Gerald Riley is with the Office of Research,
Health Care Financing Administration.
2
Social Security Bulletin, May 1989/Vol. 52. No. 5
Social Security Disability
Insurance (DI) beneficiaries have
been eligible for health insurance
benefits under the Medicare
program since July 1, 1973.
Medicare coverage was extended to
these beneficiaries by the 1972
Amendments to the Social Security
Act. Disabled workers, disabled
widows and widowers, and adults
disabled as children qualify for
Medicare coverage. In mid-1987,
disabled beneficiaries with Medicare
entitlement numbered more than 3
million and accounted for 10
percent of the Medicare population.
Before becoming eligible for
Medicare, a disabled beneficiary
must have been entitled to benefits
for not less than 24 months. This
24-month waiting period was
enacted primarily to limit program
costs, according to the Senate
Finance Committee report that
accompanied the amendments. 1
This report indicated a concern that
overlapping private health insurance
protection might result in cost
shifting onto the Medicare trust
funds, particularly with regard to
group insurance that may continue
for a period of time after the onset
of disability. The report also stated
that the waiting period would help
assure that Medicare protection
would be extended only to persons
’ Committee on Finance, U.S. Senate,
Social Security Amendments of 1972:
Report to Accompany H.R. I (92d Cong.,
2nd se%.), 1972, S. Rept. No. 92-1230.
whose disabilities are severe and
long lasting.
For disabled workers who are
able to return to work, cash
disability benefits are terminated,
even if the worker continues to
have a severe impairment. Under
the 1980 Amendments to the Social
Security Act, such beneficiaries
continue to receive Medicare
coverage for 2 years after cash
benefits are terminated, and they do
not have to undergo another
24-month waiting period to be
eligible for Medicare coverage, if
they become reentitled to DI
benefits within 5 years after leaving
the program. These provisions were
added to encourage DI beneficiaries
to return to work.
Background
Because DI beneficiaries are, by
definition, in ill health, many of
them experience high medical care
costs during the waiting period for
Medicare entitlement. These
expenses can create severe
financial hardship and limit access
to needed health services for DI
beneficiaries without health
insurance. Some policymakers
advocate eliminating the waiting
period because of its potential
adverse effect on access to medical
care.
The number of DI beneficiaries
with Acquired Immune Deficiency
Syndrome (AIDS) is increasing
rapidly. The Congressional Budget
Office (CBO), using data from the
Centers for Disease Control,
estimates that more than 15,000 DI
beneficiaries will be diagnosed as
having AIDS by the end of 1989;
this number is expected to increase
to nearly 35,000 by the end of
1992. 2 Persons with Al DS often
have very high medical care costs.
For 1988, the CBO estimates that
Medicare costs averaged $40,000
for beneficiaries with AIDS.
Some Members of Congress and
the Department of Health and
Human Services have considered
eliminating the 24-month waiting
period for Disability Insurance
beneficiaries with AIDS because of
their high medical care costs.s In
1987, for example, resolutions
introduced in both houses of
Congress (House resolution 276
and Senate resolution 24) would
have waived the 24-month waiting
period for DI beneficiaries for a
5-year period after enactment. A
2 Letter dated June 9, 1987, from Edward
Gramlish, Acting Director, Congressional
Budget Office, to the Honorable Ted Weiss,
U.S. House of Representatives.
a Unpublished data from Social Security
Administration’s Office of Disability and
Office of the Actuary suggest that
approximately 80 percent of beneficiaries
with AIDS die during the Medicare waiting
period. About 60 percent die in the first year.
These estimates are based on very early
data. The 01 program experience of
beneficiaries with AIDS will continue to be
monitored.
Social Security Bulletin, May 1969/Vol. 52, No. 5
3
precedent for waiving the waiting
period for beneficiaries with AIDS
was established when only a
Smonth waiting period was
mandated for persons with end-
stage renal disease, another group
with very high medical expenses.
William L. Roper, M.D., former
Administrator of the Health Care
Financing Administration, has stated
that the waiting period should not
be eliminated only for DI
beneficiaries with AIDS or other
specified diseases because
beneficiaries with other conditions
also incur high medical care costs:
For example, beneficiaries with
cancer also have characteristics
that are associated with high
medical expenses during the
waiting period.
In the 1980 amendments,
Congress authorized demonstration
projects and experiments to test the
effectiveness of alternative methtis
of encouraging DI beneficiaries to
return to work. One proposal was to
shorten or eliminate the initial
24-month waiting period to improve
the chances for medical recovery by
improving access to medical
services relatively soon after the
onset of disability. If enough DI
beneficiaries were able to return to
work because of earlier and more
effective medical intervention, the
long-run savings in DI cash benefits
and Medicare payments might
offset the initial increase in costs
resulting from shortening the 2-year
waiting period under Medicare.
The purpose of this article is to
present estimates of what Medicare
costs would have been during the
2-year waiting period for a cohort of
disabled-worker beneficiaries first
entitled to DI benefits in 1972,
assuming the waiting period had
4 William L. Roper and William
Winkenwerder, “Making Fair Decisions
A,bout Financing Care for Persons with
AIDS,” Public Health Reports, MaylJune
1988, pages 305-308.
not actually been in effect. The
article also presents findings on the
extent of health insurance coverage
for disabled-worker beneficiaries
during the waiting period. Lastly,
the article presents data on the
extent of retroactive entitlement to
disability benefits, which would
imply retroactive entitlements to
Medicare benefits as well, if the
waiting period were eliminated. Due
to limitations on data availability,
the analysis of these three aspects
of the waiting period question are
addressed with different data sets
reflecting different time periods.
Still, the analysis provides
information on the basic framework
of the waiting period issues that are
regarded as relevant today.
Estimating Medicare Costs
Expenditure data for medical care
utilization by disabled-worker
beneficiaries in the first 2 years of
DI entitlement are not available.
The Medicare administrative record
system does not contain this
information because Medicare
eligibility does not begin until after
the first 2 years of eligibility for
disability benefits. Various personal
interview surveys that might have
such information do not contain
sufficient numbers of DI program
beneficiaries with recent awards to
permit an analysis. s
’ Gordon Bonham, “Procedures and
Questionnaires of the National Medical Care
Utilization and Expenditure Survey,”
National Medlcal Care Ulilizatlon and
Expenditure Survey (Series A,
Methodologtcal Report NO. l), National
Center for Health Statistics, Public Health
Service, Washington, DC, 1933, and Gordon
Bonham and Larry Corder, “National
Medical Care Utilization and Expenditure
Survey Household Instruments, Instruments
and Procedures 1,” Natlonal Medical Care
Utilizatlon and Expenditure Survey,
National Center for Health Statistics, Public
Health Service, Washington, DC, 1981.
An estimate of the cost of
eliminating the Medicare waiting
period must include costs for those
DI beneficiaries whose cash
benefits are terminated, due to
death or recovery, before the end of
the period. Costs also must be
estimated for the first 2 years of DI
entitlement for beneficiaries who
ultimately become eligible for
Medicare. Although actual
expenditure data for medical care
use by DI beneficiaries in the first 2
years are not available, empirical
regularities in the Medicare
utilization data after the first 2 years
suggest the possibility of making
predictions of utilization in the first
2 years based on subsequent
utilization. 6 The data indicate that
Medicare use for beneficiaries who
died or recovered in the first 2
years might be estimated from the
utilization experience of those who
died or recovered at a later point in
time. Over time, the cost patterns
for beneficiaries who died appear to
be the same regardless of the
length of time they were in the
Medicare program. Similar results
seem to hold for those who
recovered.
These findings led to the
conclusion that estimates of costs
during the waiting period could be
obtained by applying the utilization
rates of decedents, survivors, and
recovered persons observed after
the waiting period to the observed
incidence of death and recovery in
the waiting period. In addition,
average levels of medical care
utilization for those in the DI
program over long periods of time
seemed very stable in that period,
e Barry Bye, Gerald Riley, and James
Lubitz, “Medicare Utilization by Disabled-
Worker Beneficiaries: A Longitudinal
Analysis,” Social Security Bullelin,
December 1967, pages 13-28.
4 Social Security Bulletin, May 1969/Vol. 52, No. 5
again permitting average utilization
to be applied to the first 2 years in
the program for those in the DI
program for substantially longer
periods, Medical care utilization by
disabled-worker beneficiaries
immediately following the onset of
disability might be somewhat higher
in the early years, until the health
problem that caused the disability
has stabilized. The kind of
backward projection described
above could, therefore, underpredict
actual costs for this period;
however, two factors mitigate this
effect. First, the onset of disability
for many individuals is gradual; thus
medical conditions may have
stabilized before entitlement.
Second, the DI program has a
5-month waiting period before
entitlement to cash benefits. Even
persons with abrupt onsets of
disability will probably have had
substantial medical care before D1
program entitlement begins.
Sample Data
The data for this analysis are the
same as those previously described
in Bye et al. 7 A 5-percent sample of
newly entitled worker beneficiaries
was selected from the cohort of
1972 entitlements. The cohort was
limited to beneficiaries under age
62 at the time of entitlement
because it was difficult to ascertain
from Social Security Administration
(SSA) administrative records if initial
periods of entitlement for persons
aged 62-64 were for disability or for
reduced retired-worker benefits.
After the sample cases were
drawn, data were matched from two
statistical data files: the Continuous
Disability History Sample (CDHS)
and the Continuous Medicare
‘Ibid.
History Sample (CMHS).” The
CDHS contains information on
beneficiary characteristics for a
20-percent sample of disability
determination decisions at the time
of benefit award. Included are
primary diagnoses associated with
the disabling conditions, former
occupation, and years of education.
The CMHS contains demographic,
entitlement, and claims information
on a 5percent sample of Medicare
beneficiaries. The file is longitudinal
in structure and, at the time of this
study, included annual summaries
of Medicare utilization and
reimbursement for 1974-81.
Methodology
A detailed description of the
estimation approach is provided in a
recently published SSA Working
Paper. @ A brief overview of the
approach follows. The first step in
the construction of waiting period
projections was to estimate
prediction equations for Medicare
utilization. The equations describe
the marginal relationship between
Medicare utilization and a set of
covariates-demographic
characteristics and factors relating
to the nature of the disability-
conditional on DI program outcome
(death, recovery, still in the
a Continuous Dlsability History Sample,
Restricted Use Data File: Description and
Documentation, Office of Research and
Statistics, Social Security Administration,
1978, and Medicare Statistical Files
Manual, Bureau of Data Management and
Strategy, Health Care Financing
Administration, April 1987.
@ Barry V. Bye and Gerald F. Riley,
Statistical Methods for the Estimation of
Costs in the Medicare Waiting Period for
Social Security Disabled-Worker
Beneficiaries (ORS Working Paper Series,
No. 37), Office of Research and Statistics,
Office of Policy, Social Security
Administration, 1989.
program) as of December 1981. A
total of 12 equations was estimated,
four for each of the three program
outcome groups. The four equations
measured (1) the probability of
Medicare utilization in a year; (2)
the probability of hospital use in a
year, given Medicare utilization in
that year; (3) the average
reimbursement per month, given
hospital use in a year; and (4) the
average reimbursement per month,
given Medicare utilization but no
hospital use in a year.
These equations were used to
estimate expected Medicare costs
for the 1972 beneficiary cohort in
both years of the waiting period and
separately in the second year only.
To obtain the overall cost estimates,
monthly costs were estimated for
each person during the Byear
waiting period and then totaled over
the period. Similar calculations were
made for the second year of the
waiting period separately.
Beneficiaries who were in the
program for less than 1 year did not
contribute to the costs of eliminating
the waiting period in the second
year. Expected costs were inflation-
adjusted to 1981 dollars.
Results of Waiting
Period Estimates
DI Program Outcome
Table 1 shows the Disability
Insurance program experience for
the 1972 cohort under age 62. lo It
shows the proportion of disabled-
worker beneficiaries whose cash
benefits were terminated in the first
2 years of entitlement and who did
not become eligible for Medicare.
Of the cohort, 12.8 percent died
lo End-stage renal disease cases were
excluded from the analysis because of their
shortened waiting period.
Social Security Bulletin, May 1989/Vol. 52, No. 5 5
Table I.-Program outcome for a 1972 cohort of disabled-worker beneficiaries, by selected
characteristics, 1972-81
Characteristic
Total .................
sex:
Men ....................
Women .................
Race:
White and unknown .....
Black ..................
Other.. ................
Age in 1972:
Under 40 ...............
40-49 ..................
50-59 ..................
60-61 ..................
Diagnostic group:
Infectious and parasitic . .
Neoplasms
.............
Endocrine and metabolic.
Mental disorders ........
Nervous system .........
Eye
and
ear ............
Circulatory ..............
Respiratory .............
Digestive ...............
Genitourinary ...........
Musculoskeletal .........
Traumatic injuries .......
Other and unknown .....
Years of education:
None ...................
1-8 .....................
9-12 ....................
13 or more .............
Other and unknown ....
Occupation:
Professional, technical,
and managerial ......
Clerical, sales ...........
Service .................
Farming, fishing,
and forestry ..........
Processing .............
Machine trades ........
Benchwork .............
Structural ..............
Miscellaneous ..........
Unknown ...............
seefoomof6s
at e8-K.i
.
.
.
.
.
.
.
.
.
.
.
. .
. .
. .
. .
. .
. .
. .
. .
.
Time in DI program
Less than 2 years 2 years or more
Percent of deaths Percent recovered Percent as of 1981
Percent
Sample of pop- Medicare Still in
size ulation
Total
Total 2nd year Total 2nd year enrollees Death Recovery Age 65 program
18,782 100.0
13,150 70.0
5,632 30.0
15,958 85.0
2,617
13.9
207 1.1
2,961
15.8
3,602 19.2
9,407 50.1
2,812 14.9
319 1.7
1,582 a.4
613 3.3
1,736 9.2
681 3.6
385 2.0
5,321 28.3
1,163 6.2
542 2.9
128 .7
2,883 15.3
1,260 6.7
2,179 11.6
215
1.1
6,540 34.8
8,180 43.6
1,459 7.8
2,388 12.7
1,878 10.0
2,266
12.1
2,656
14.1
757 4.0
564 3.0
1,632
8.7
1,164 6.2
2,220 11.8
2,847 15.2
2,798
14.9
100.0
100.0
100.0
loo.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
lw.o
100.0
100.0
100.0
100.0
100.0
100.0
100.0
lGO.o
loo.0
12.8 5.2 5.3 4.0 81.9 16.7 4.3 28.3 32.6
13.9 5.4 6.0 4.4 80.1 18.4 4.8 26.9 30.1
10.4 4.7
3.7 3.0 85.9
12.6 3.1 31.8 38.4
12.8 5.2 5.4 4.0 81.8 16.3 4.3 29.2 32.0
13.2
5.7
4.7
3.6 82.0
18.7 4.2 23.7 35.5
8.2 1.9 5.8 3.4 86.0 17.9 6.3
22.7
39.1
6.7 2.2 15.2 10.9
78.1
8.1 15.5
13.4
5.1 7.9 6.1
78.7 16.2
6.0
14.0
5.8
2.6
2.0
83.4 21.4 1.3
14.8
6.3
.6 .5 84.6 10.4 .l
(2)
34::
74.2
54.4
56.5
26.3
12)
7.2 2.8 23.2 15.7 69.6 14.4 7.2 21.9 26.0
64.5 17.6 1.9 1.6 33.6 17.1 .9 8.1 7.5
12.6 7.4 1.6 1.4 85.8 20.7 1.5
31.3 32.3
3.3 1.6 4.7 3.6 92.1 11.5 6.6 16.8 57.2
6.3 2.6 2.8 1.9 90.9
14.7
3.8
24.5 47.9
4.2
3.1 4.9 3.6 90.9 6.8 3.9 38.2
42.1
12.3
6.0
2.5 2.2 85.3 22.8 2.2 35.3 25.0
10.2
5.6 1.0
.7
88.8
27.7
.6
40.3 20.2
22.5 10.5 4.2 3.7 73.3 24.0 3.7 21.2
24.4
25.0 9.4 6.3 4.7 68.8 16.4 5.5 21.9 25.0
2.7
1.6 6.8 4.8 90.5 9.8
5.4 36.6 38.7
2.5 1.0
22.1 15.8
75.5
7.2 15.1 18.8 34.4
6.6 3.4 5.2 3.7 88.2 14.0 5.0 25.1 44.2
10.7
6.1
1.4
1.0 87.9
19.5 1.0 37.7 29.8
12.2 5.2 3.2 2.4 84.6 17.9 2.4 35.2 29.2
14.4 5.6 6.7 5.0 78.9 16.5 5.1 24.5 32.9
15.4 4.9 8.4 6.5 76.2 15.2 7.8 22.6 30.6
8.1
3.8 4.7 3.1 87.3 14.4 4.9 25.5 42.5
17.2 6.7 9.9 5.1 77.8 18.1 4.8 28.9 26.0
14.5
6.1 9.1 5.0 80.5
14.4 4.1 28.5 33.5
12.1
5.0 8.1
4.1
83.7
16.2
4.0 30.0
33.6
10.8
4.6
4.4 2.9 84.8 18.4 3.3 36.2 27.0
13.3 5.3 4.8 3.6 81.9 18.3 3.6 29.1 31.0
12.8 4.8 5.8 4.3
81.4 17.7
3.6 29.3
30.9
10.3 4.1
4.4
3.2 85.7 12.3 3.9 29.6 39.9
12.5 4.9 6.1 4.8 81.4 19.1 4.9 30.0
27.4
12.8 5.8 6.4 4.4 80.9 18.2 4.6 27.0 31.2
11.2
4.2 5.6 3.8 83.2
14.9 4.7 22.9 40.7
Of fable.
6
Social Security Bulletin, May 1989/Vol. 52, No. 5
Table l.-Program outcome for a 1972 cohort of disabled-worker beneficiaries, by selected
characteristics, 1972-81 -Continued
Time in DI program
Less than 2 years 2 years or more
Percent of deaths Percent recovered Percent as of 1981
Percent
Sample of pop- Medicare Still in
Characteristic size ulation Total
Total 2nd year Total 2nd year enrollees Death Recovery Age 65 program
Primary insurance
amount (1985):
Less than $300..
. . . . . . .
.
3,052 16.2
100.0 8.3
3.7 0.4 6.0 03.4 14.3 7.6 26.5
34.9
$300$399 . . . . . . .
. . . . . . . . 4,285 22.8 100.0 10.5
5.0
6.4
4.4
83.1 15.2 5.5 27.1
35.4
$4co$499 . . . . . . . . . . . . . . . 3,803 20.2
100.0 13.1 5.7
4.6
3.4 82.3 17.8 3.5 27.7 33.3
$mo3599 . . . . . .
. . . . . . . 5,022 26.7 100.0 15.6
5.9
1.9 1.6 82.6 18.5 1.9 32.0
30.1
$600 of more.. . .
. . . . . . . 2,620 13.9 tOO.0
16.3 5.3 7.6
6.2 76.1 16.7 4.2 26.2 29.1
I
’ Beneficiaries under aae 62 and entitled to benefits in 1972.
2 Data not applicable.
and 5.3 percent recovered in the
first 2 years of benefit receipt,
Alteration of the waiting period
would make them Medicare
enrollees for the first time. The
proportion of deaths among this
group of beneficiaries will
determine, to a large extent, the
cost of eliminating the wafting
period because Medicare costs are
especially high in the year of and in
the year preceding death. Of those
who died within the first 2 years,
the data show that about 40 percent
(5.2 percent overall) of the deaths
occurred in the second year of
eligibility. There was substantial
variation in death rates by
diagnostic group. Death rates in the
first 2 years range from a high of
64.5 percent for the neoplasms
group to a low of about 2.5 percent
for the traumatic injuries group.
About twothirds of the deaths in
the neoplasms group occurred in
the first year. The amount of
variation in these early death rates
portends substantial variation
across these diagnostic groups in
the costs of eliminating the
Medicare waiting period.
Table 1 also shows some
pronounced variation in recovery
fates in the first 2 years of the
program. A notable decline is seen,
for example, in recovery by age:
from a high of 15.2 percent for
beneficiaries under age 40 to a low
of less than 1 percent for
beneficiaries aged 60-61. Two of
the diagnostic groups-infectious
and parasitic diseases and
traumatic injuries-show early
recovery rates exceeding 20
percent.
The last four columns of table 1
show the proportions of additional
program terminations among the
1972 cohort during the next 8 years
and the proportion of beneficiaries
still in the program. About 16.7
percent of the cohort die after
attaining Medicare eligibility, 4.3
percent recover, 28.3 percent are
transferred from the DI program to
retired-worker beneficiary status at
age 65, and about 32.6 percent
(under age 65) remain in the
program. Large variations occur in
these outcome distributions by age,
diagnosis, and other beneficiary
characteristics.
Eliminating the Waiting
Period
Both years. Table 2 shows the
estimated cost per entitlee in the
1974-81 period and the cost of
eliminating the entire waiting period
under the assumption that Medicare
utilization for all beneficiaries would
be covered from the first day of DI
entitlement and that Medicare is the
first payer. In 1981 dollars, the
overall average additional costs for
eliminating the full 2-year waiting
period
are projected to be
approximately $2,692 per
beneficiary under age 62. l1 The
overall average cost for this cohort
for the period 1974-81 is estimated
” Due to the presumed high death rates
and low recovery rates in this group, this
average would be somewhat higher if
beneficiaries aged 62-64 were included in
the analysis.
Social Security Bulletin, May 1989Nol. 52, No. 5
7
Table P.-Estimated 2-year Medicare waiting period costs for a 1972 cohort of disabled-worker beneficiaries,
by program status, 1972-81
Characteristic
Average
reimbursement
per entittee Percent
increase
Sample Total, Additional, in lo-year
size 197487 2 years costs All
Distribution by 01 program status
Died Recovered
Within Within
first first Still in
Total 2 years Total 2 years Age 65 program
Total ..................
18,782 $6,018 $2,692 44.7
sex:
Men, ....................
Women ..................
13,150
5,632
5,140 2,328 45.3
8,068 3,542
43.9
Race:
White and unknown. .....
Black ...................
Other ...................
15,958 5,958 2,694
45.2
2,617 6,340 2,699 42.6
207 6,701 2,415 36.0
Age in 1972:
Under 40 ................
40-49 ...................
50-59 ...................
60-61 ...................
2,961 5,643 1,923 34.1
3,602 6,687
2,666
39.9
9,407
6,727 2,846
42.3
2,812 3,182 3,017 94.8
Diagnostic group:
Infectious and parasitic ...
Neoplasms ..............
Endocrine and metabolic. .
Mental disorders .........
Nervous
system ..........
Eye and ear. ............
Circulatory. ..............
Respiratory ..............
Disgestive ...............
Genitourinary ............
Musculoskeletal
..........
Traumatic injuries ........
Other and unknown ......
319 4,604 1,981 43.0
1,582 3,038 5,375 176.9
613 9,451 3,867 40.9
1,736 6,184 1,696 27.4
681
6,758 2,261 33.5
385
5,880
1,972 33.5
5,321
6,159
2,717 44.1
1,153 6,941 3,077 44.3
542 6,537 3,899 59.6
128 6,651 3,749 56.4
2,883
6,131 1,983 32.4
1,260 4,350 1,499 34.5
2,179 6,897 2,570 37.3
Years of education:
None ....................
l-8.. ....................
912., ...................
13 ......................
Other and unknown. .....
215 5,220 2,064 39.5
6,540
5,721
2,488 43.5
8,180 6,165 2,872 46.6
1,459 5,587 2,894 51.8
2,386 6,659 2,564 38.5
Occupation:
Professional, technical,
and managerial.
Clerical, sales ............
Service ..................
Farming, fishing,
and forestry ............
Processing ..............
Machine trades ..........
Benchwork ..............
Structural. ...............
Miscellaneous. ...........
Unknown ................
See footnotes at end of table.
1,878 5,969 3,238 54.3
2,266
6,884
3,271 47.5
2,656 7,036 3,007 42.7
757 4,155 1,675 40.3
564 6,117 2,634 43.1
1,632
5,934 2,621
44.2
1,164 6,431 2,686 41.8
2,220 4,947 2,201 44.5
2,847 5,202 2,340 45.0
2,798 6,423 2,633 41.0
100.0
loo.0
100.0
100.0
100.0
109.0
loo.0
106.0
100.0
100.0
100.0
109.0
100.0
100.0
100.0
loo.0
100.0
100.0
100.0
100.0
106.0
1cO.o
100.0
100.0
106.0
100.0
100.0
100.0
100.0
109.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
58.3 29.5 3.0 1.1 19.0 19.7
62.1 31.1 3.3 1.2 17.7 16.9
52.4 27.0
2.6 1.0
21.1 23.9
57.8 29.2 3.1 1.2
19.7
19.5
61.9 31.9 2.7 .9 15.0 20.5
52.1 20.0 3.8 .9 17.9 26.2
45.5 23.0 13.6 4.3
58.8 31.6 4.6 1.8
62.9 29.8
1.1
.5
51.8 30.5 .2 .l
Ia
20;
48.0
40.9
36.7
15.3
(2)
56.1 24.9 9.4 5.8 16.3 18.3
93.8 72.5 .5 .2 3.1 2.7
53.8 24.5 1.0 .3 22.9
22.4
30.1 9.6 6.8 1.9 15.8 47.3
47.5 16.5
3.1
.7 17.5 31.8
32.7 18.4 4.0 1.4 32.0 31.3
57.6. 23.7 1.6 .6 24.4 16.4
65.9 23.0 .4 .2 22.5 11.1
74.4 43.1 2.0 .7 11.0 12.6
58.7 40.5 3.1 1.6 18.0 20.2
35.6 10.8 5.4 1.9 30.0 29.0
33.0 10.2
17.4
7.3 19.9
29.7
50.1 20.9 3.2 1.2 17.9 28.9
56.0 23.2 .7 .2 25.5 17.8
57.3
27.3
1.3 .5
24.0 17.4
60.3 32.1 3.6 1.4 16.5 19.6
59.8 32.8 6.3
2.2 15.4 18.5
52.1 23.5 3.1 1.0
17.8
26.9
62.9 33.9
4.4
1.6
17.9 14.8
56.6 31.4 3.9 1.5 18.8 29.8
55.1 26.5 2.1 .a 21.6 21.1
51 .o 21.7 2.5 1.0 28.3
18.3
61.0 31.3 2.1 .8 18.4 18.5
59.0 30.0
2.4 1.1 19.8 18.8
52.1 26.5 2.3 .8
20.8 24.8
61.8 28.7 3.1 1.2 20.0
15.1
62.9 31.4 2.9 1.2
17.1 17.2
56.1 27.8 2.9 1.0 15.9 25.2
s
Social Security Bulletin, May 1989/Vol. 52, No. 5
Table P.-Estimated 2-year Medicare waiting period costs for a 1972 cohort of disabled-worker beneficiaries,
by program status, 1972-81-Continued
Characteristic
Average
reimbursement
Distribution by DI program status
per entitlee Percent
Died Recovered
increase
Within Within
Sample Total, Additional,
in lo-year first
first Still in
size 1974-81 2 years costs All Total
2 years Total 2 years Age 65 program
Primary insurance
amount (1985):
Less than $300..
. . . . . . . . 3,052 6,399 2,536 39.6 100.0
48.9 20.8 5.4 1.9 20.7 25.0
$3003399 . . . . . . . . . . .
. . . 4,285 6,378 2,649 41.5
100.0
52.7 26.9 3.3 1.2 20.1 24.0
$400-$499 . . . . . . . . . . . . . . 3,803 6,122
2,618 42.8
100.0
56.7 28.6
2.1 .8 20.2 21 .o
$500$599 . . . . . . . . . . . . . . . 5,022 5,880
2,844 48.4
loo.0
64.2 33.8
1.4 .5 18.8 15.1
$600 or more.. . .
. . . . . . . . 2,620 5,096 2,757
54.1
100.0
67.5 35.7 4.4 2.0
14.4 13.7
’ Beneficiaries under age 62 and entitled to benefits in 1972
2 Data not applicable.
by the model to be $6,018 per
beneficiary. I* Thus, the average
increase in the cost for the cohort
over the first 10 years is about 45
percent by covering the first 2 years
as well as the next 8 years.
Of the total cost associated with
eliminating the entire waiting period,
about 58 percent is attributed to
costs for beneficiaries who died in
the lo-year period. Almost 30
percent of the additional cost is
attributed to those who died within
the first 2 years of DI entitlement.
The reason the latter number is so
high is that Medicare costs for
these persons are being measured
at the most expensive time in their
medical care utilization histories.
Only 3 percent of the increase in
cost would be for beneficiaries who
recover. The remaining increase
I2 This figure differs from the $7,563 cost
shown in table 1 of the 1987 article by Bye
et al, op.
cit.,
for three reasons: (1) the
denominator contains all beneficiaries, not
just those who survive the first 2 years, (2)
end-stage renal disease cases are excluded,
and (3) it is based on the model estimate
and not the observed data.
would be split more or less equally
between beneficiaries who remain
in the program and those attaining
age 65, with 19-20 percent of the
increase attributed to each. In
particular, only 20 percent of the
increase in Medicare costs would
be for beneficiaries who stay in the
program and who might be viewed
as the prime candidates for
Medicare support as an aid to
return to work.
Variation in the additional costs
by diagnosis is large. For
beneficiaries in the neoplasms
group, additional Medicare costs
are almost double that of existing
costs. This difference, of course, is
due to the extremely high death
rates in this group during the first 2
years of DI entitlement. Virtually all
(93.8 percent) of the increase would
be for those who die within 10
years of entitlement, with 72.5
percent of the increase attributed to
those who die in the first 2 years.
The digestive and genitourinary
groups also have relatively large
cost increases (59.6 percent and
56.4 percent, respectively) with
large proportions related to those
who died within 10 years. The
mental disorders group shows the
lowest projected increase-27.4
percent-of which only 30.1 percent
is for those who died. This group
also had the lowest dollar
increase-% ,696 in 1981 dollars.
Several subgroups show fairly
high proportions of increased costs
relating to recovery: 14 percent for
the youngest group, 9.4 percent
and 17.4 percent, respectively, for
the infectious and parasitic diseases
and traumatic injuries groups. Other
subgroups have relatively high
proportions of increased costs for
beneficiaries who remained in the
program. For example, 47.3 percent
of the increased cost projected for
beneficiaries with mental disorders
would be for beneficiaries remaining
in the program.
Among beneficiaries with nervous
system disorders, eye and ear
disease, musculoskeletal diseases,
and traumatic injuries, a relatively
large percent of the increased costs
also would be for persons
remaining in the DI program
(29.0-31.8 percent). Persons in
these diagnostic subgroups may be
expected to benefit more from early
access to medical care than other
Social Security Bulletin, May 1989/Vol. 52, No. 5
9
subgroups because relatively more
of the increase in waiting period
costs would be for younger
disabled-worker beneficiaries who
tend to remain in the program.
Many other factors would influence
the effectiveness of eliminating the
waiting period as a work incentive
for these diagnostic subgroups-for
example, responsiveness of these
conditions to treatment and their
tendency to worsen over time.
Second year only. Table 3
shows the additional program costs
that would be incurred if only the
second year of the waiting period
were eliminated. As the total line of
the table shows, the overall
increase in Medicare costs would
be about 20 percent, a little less
than one-half of the increase in
Byear costs. Although 56 percent of
the increase over the lO-year period
is attributed to beneficiaries who
died, only 19.5 percent would be for
those who die in the second year.
This increase is substantially
smaller than the corresponding
figure for the 2-year estimate,
reflecting the shape of the death
rate distribution. Most of the other
results are qualitatively the same as
those for the 2-year cost
projections.
Health Insurance Coverage
One important issue related to
waiver of the waiting period is the
extent to which disabled workers
have health insurance coverage
before Medicare entitlement begins.
Health insurance coverage includes
private insurance, Medicaid, and
other government-sponsored
insurance. If most beneficiaries
already have health insurance
coverage during the 2-year waiting
period (for example, through their
former employer, through their
spouse, or under Medicaid), then
Medicare benefits may merely
replace this existing coverage. Even
if Medicare were designated as the
second payer, there might be a
quick adjustment in the insurance
industry to limit liability for disabled
workers. The most recent data on
the extent of insurance coverage
during the waiting period pertains to
beneficiaries in the last 6 months of
their 2-year waiting period in 1982.
An important qualification of these
data, however, is that the
Consolidated Omnibus Budget
Reconciliation Act of 1985
contained a provision mandating
that certain persons who lose their
jobs be allowed to enroll voluntarily
and at their own expense in the
group health insurance plan of their
former employer for up to 18
months after the loss of
employment. j3 Consequently, the
data presented here may
underestimate the extent of health
insurance coverage existing among
disabled-worker beneficiaries today.
The data used here were
obtained from a sample of new
disabled-worker beneficiaries who
were interviewed as part of the New
Beneficiary Survey (NBS) in
December 1982. I4 At the time of
the interview, disabled survey
respondents had been in the DI
program 18-30 months. For this
study, responses of beneficiaries
still in the Medicare waiting period
were analyzed. l5 These
beneficiaries were interviewed 18-24
months after DI entitlement.
I3 Public Law 99-272, Consolidated
Omnibus Budget Reconciliation Act of 1985,
100 Stat. 222, Title X-Private Health
Insurance Coverage, April 7, 1986.
r4 Linda Drazga Maxfield, “The 1982 New
Beneficiary Survey: An introduction,” Social
Security Bulletin, November 1983, pages
3-11.
r5 No coverage information was available
for beneficiaries who died or were
institutionalized in the first 18 months in the
program.
Seventy-three percent of these
beneficiaries reported some form of
health insurance. The estimated 27
percent reporting no private health
insurance or other coverage is
about the same as the proportion
found by Packard using the full
NBS disabled-worker sample. 1e The
percent reporting no coverage was
smaller than in 1972 when, in a
major SSA survey of the disabled,
respondents were asked about the
presence of health insurance
coverage. l7 Thirty-five percent of
respondents who had been entitled
to DI benefits for less than 2 years
in 1972 indicated they did not have
any kind of coverage.
In the waiting period, the
proportion of NBS respondents
reporting health insurance coverage
varied by individual characteristics.
The proportion increased with
increasing age. About 63 percent of
those under age 45 reported
coverage, compared with 74
percent of those aged 45-54 and 78
percent of those aged 55-61. As
indicated above, older beneficiaries
are projected to have higher costs
in the waiting period.
Coverage rates for men and
women were about the same. By
race, blacks were less likely to have
coverage than nonblacks; by marital
status, married persons were more
likely to have some form of
coverage than unmarried persons
I8 Michael D. Packard, “Health Status of
New Disabled-Worker Beneficiaries: Findings
from the New Beneficiary Survey”
(unpublished manuscript), Division of
Program Analysis, Office of Research and
Statistics, Office of Policy, Social Security
Administration.
I7 Donald Ferron (editor), Disability Survey
72, Disabled and Nondisabled Adults: A
Monograph (Research Report No. 66), Office
of Research and Statistics, Office of Policy,
Social Security Administration, 1981.
10
Social Security Bulletin, May 1989/Vol. 52, No. 5
Table 3.-Estimated second-year Medicare waiting period costs for a 1972 cohort of disabled-worker beneficiaries,
by program status, 1972-81
Characteristic
Total .................
sex:
Men ....................
Women. ................
Race:
White and unknown. ....
Black ..................
Other ..................
Age in 1972:
Under 40 ...............
40-49 ..................
50-59 ..................
60-61 ..................
Diagnostic group:
Infectious and parasitic .
Neoplasms .............
Endocrine and metabolic.
Mental disorders ........
Nervous system .........
Eye and ear ............
Circulatory. .............
Respiratory .............
Digestive ...............
Genitourinary ...........
Musculoskeletal
.........
Traumatic injuries ......
Other and unknown. ...
Years of education:
None. ..................
l-8 .....................
9-12 ...................
13 or more ............
Other and unknown. ...
Occupation:
Professional, technical,
and managerial.
Clerical, sales. .........
Service ................
Farming, fishing,
and forestry ..........
Processing .............
Machine trades ........
Benchwork .............
Structural. .............
Miscellaneous ..........
Unknown ...............
.
.
.
.
.
.
.
,
,
.
.
.
. .
. .
.
. .
. .
. .
. .
.
see
footnotes at end of table.
Average
reimbursement
Distribution by DI program status
per entitlee Percent Died Recovered
increase Within Within
Sample Total, Additional, in lo-year
first
first Still in
size 197481 2 years costs All Total 2 years Total 2 years Age 65 program
18,782 $6,018 $1,218 20.3
13,150 5,140 1,037 20.2
5,632 8,066 1,641 20.4
15,958 5,956 1,221 20.5
2,617 6,340 1,211 19.1
207 6,701 1,103 16.5
2,961
5,643 833 14.8
3,602 6,687 1,152 17.2
9,407 6,727 1,307 19.4
2,812 3,182 1,413 44.4
319 4,604 833 18.1
1,582 3,038 1,726 56.8
613 9,451 1,889 20.0
1,736 6,184 807 13.1
681 6,758 1,074 15.9
385 5,880 947 16.1
5,321 6,159 1,309 21.3
1,153
6,941 1,530 22.0
542 6,537 1,758 26.9
128 6,651 1,521 22.9
2,883 6,131 968 15.8
1,260 4,350 702 16.1
2,179 6,897
1,230
17.8
215
5,220 1,013 19.4
6,540
5,721 1,160 20.3
8,180 6,165 1,271 20.6
1,459 5,587
1,225
21.9
2,388
6,659 1,212 18.2
1,878 5,969 1,431 24.0
2,266
6,884 1,450 21.1
2,656 7,036
1,379 19.6
757 4,155 802 19.3
564 6,117
1,178 19.3
1,632 5,934 1,172 19.8
1,164 6,431 1,220 19.0
2,220 4,947 997 20.2
2,847 5,202
1,089 20.9
2,798 6,423 1,189 18.5
100.0
106.0
100.0
190.0
loo.0
100.0
100.0
100.0
100.0
100.0
100.0
loo.0
loo.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
loo.0
100.0
100.0
100.0
100.0
loo.0
100.0
100.0
100.0
loo.0
100.0
100.0
100.0
56.0 19.5 2.5 0.6 20.8 20.6
59.8 20.2 2.8 .7 19.6 17.9
50.5 18.5 2.2
.5
22.6 24.7
55.5 19.2 2.6
.6
21.5
20.4
59.8
22.3
2.3 .5
16.4 21.6
50.1 11.1 3.4 .5 19.3 27.1
42.6 12.3 12.6 2.5
56.0 20.7 4.0 1.1
61.3 20.5 .8 .3
48.2
19.9
.l .l
m
22.!
51.7
44.8
40.1
15.9
0
53.5 11.8 7.1 3.2 19.0 20.5
90.7 50.7 .6
.2 4.7
4.0
54.1 20.1
.8
.2
23.3
21.9
30.8 6.5 6.0 1.1 16.3 46.9
47.2 9.7 2.8 .4 18.2 31.8
33.1
17.2
3.3 .8 32.9 30.7
57.4
17.0
1.2
.3
25.1
16.2
66.7
17.4
.3 .2 22.4 10.6
72.9
32.8
1.7 .4 12.1 13.4
51.2 24.0 2.9 1.2 22.1 23.8
37.4 9.0 4.2 1.0 30.3 28.1
35.8
7.7 15.5
3.5 20.9 29.8
50.4 15.9 2.6 .6 18.4 28.6
57.1 19.5 .5 .l 25.4 17.0
55.8 19.0 1.1 .3 25.5 17.7
57.5 20.7
3.1 .8
18.4 21.1
55.2
17.9
6.0 1.4 18.0 20.8
51.9
17.6
2.6 .5 18.6 27.0
59.9
21.6
4.0 1.0
20.1
16.0
53.3 20.1 3.4 .8 21.0 22.3
52.9 16.9 1.8
.4
23.4 21.9
51.1 15.7 2.0
.5
29.0 17.9
58.5 22.0 1.7 .3 20.3 19.6
56.3 19.3 2.0 .6 21.9
19.9
49.5 16.3 1.9
.4 22.6
26.0
60.1 18.9 2.5 .6 21.7 15.7
62.2 23.7 2.3 .6 18.1
17.4
53.8 18.4 2.5 .6
17.3
26.4
Social Security Bulletin, May 1989/Vol. 52, No. 5
11
Table 3.-Estimated second-year Medicare waiting period costs for a 1972 cohort of disabled-worker beneficiaries, by
program status, 1972-81-Continued
Characteristic
Primary insurance
amount (1985):
Less than $300 .........
$3004399 ..............
$400$499 ..............
$5004599 ..............
$600 or more ...........
Average
reimbursement
Distribution by DI program status
per entitlee
Percent Died Recovered
increase Within Within
Sample
Total, Additional, in lo-year first first
size 197481 2 years
costs
All
Total 2 years Total 2 years Age 65
Still in
L-
l program
3,052 6,399 1.191 18.6 100.0 48.4 13.9 4.6 1.1 21.7 25.3
4,285 6,378 1,230 19.3 100.0 51.3 19.6 2.7 .6 21.4 24.6
3,803 6,122 1,206 19.7 100.0 54.9 20.0 1.7 .4 21.8 21.6
5,022 5,880 1,259 21.4 100.0 61.2 21.7 1.3 .3 21.1 16.6
2,620 5,096 1,171 23.0 100.0 64.4 20.7 3.8 1.2 16.7 15.2
’ Beneficiaries under age 62 and entitled lo benefits in 1972.
*Data not applicable.
(table 4). About 78 percent of
married persons reported they had
health insurance coverage; about
64 percent of unmarried persons
reported such coverage. Some
married respondents were probably
covered under their spouse’s policy.
Of respondents who reported
having a working spouse, 82
percent had coverage; nearly 73
percent of those reporting no
working spouse had coverage.
Table 4.-Percent of Disability Insurance beneficiaries with health insurance
coverage during the last 6 months of the Medicare waiting period, by
selected characteristics, 1982
Percent
73.0
Men ........................................................
Women .....................................................
72.5
74.3
Other tabulated data (not shown
here) indicate that most
beneficiaries with some health
insurance had some form of
nongovernmental coverage. About
54 percent reported private or other
insurance, about 14 percent
reported Medicaid, and about 12
percent reported CHAMPUS
(Civilian Health and Medical
Program of the Veterans’
Administration) or military
insurance. Twenty-seven percent of
the beneficiaries reported no
coverage. The proportion of
beneficiaries with private insurance
reaches almost 74 percent if the
individual is married with a spouse
working. Only 37 percent of
nonmarried persons reported such
Married .....................................................
Spouse working ...........................................
Spouse not working .......................................
Not married
.................................................
77.5
82.0
73.7
64.6
Under age 45 ...............................................
Age 45-54 ..................................................
Age 55-61. .................................................
62.9
73.7
78.1
Black ......................................................
Nonblack ...................................................
60.5
75.5
coverage. Muller has done further
analysis of the factors associated
with having and not having private
insurance. la
Retroactive Entitlement
lo L. Scott Muller, “Medicare and Other
Health Insurance Coverage Among Recently
Entitled Disability Insurance Beneficiaries:
Findings from the New Beneficiary Survey”
(unpublished manuscript), Office of Disability,
Social Security Administration, 1988.
Frequently, entitlement to
Disability Insurance benefits is
established retroactively because of
delayed filing by the beneficiary or
because of the length of time
needed for disability claims
adjudication, including the appeals
process. If entitlement is
established more than 24 months
12 Social Security Bulletin, May 1989/Vol. 52, No. 5
retroactively, Medicare entitlement
is also established retroactively to
the specific date 24 months from
the entitlement date for cash
benefits. In such cases, the
beneficiary has 6 months to file
Medicare claims retroactively for
services received after the Medicare
entitlement date.
If the waiting period for Medicare
is defined retroactively as the result
of retroactive entitlement to
disability benefits, the advantages
created by waiving the 2-year
waiting period may be substantially
diluted. The monies for medical
care would not actually be available
soon after the onset of disability.
Administration of the Medicare
program might also be very difficult
if long periods of retroactivity are
permitted for many beneficiaries,
Table 5 shows the frequency of
retroactive entitlement to DI
benefits. The data are derived from
an extract of the Master Beneficiary
Record (MBR) for a l-percent
sample of new DI benefit awards in
1987. I* The award date refers to
the date that the payment record
was posted to the MBR. The date
of posting roughly corresponds to
the date a decision to award DI
benefits was made. In a few cases,
however, several months may
elapse between the award decision
and the posting of the award to the
MBR.
From the l-percent file, records
were selected for workers who were
under age 62 in the month of
entitlement and who had no
previous periods of DI entitlement.
This selection resulted in a sample
of 2,993 records. For each
beneficiary in the sample, the
number of months between the date
I9 Lewis L. Frain, “The Monthly OASDI
One-Percent File” (unpublished manuscript),
Division of Statistics Analysis, Office of
Research and Statistics, Office of Policy,
Social Security Administration.
Table
L-Percentage distribution of number of months between date of
entitlement and date of posting on Master Beneficiary Record for disabled-
worker beneficiaries, by diagnostic group and age,1987
Months
Characteristic Total
Less
than 1 1-12 13-24
25 or
more
Diagnosis
Total . . . . . . . . . . . , . . . .
Mental disorders.. . . . . . .
Circulatory diseases. . . . . .
Neoplasms . . . . . . . . . . . . . . .
Musculoskeletal diseases.
All other and unknown.. . .
Age
Under 45 ................
45-54 ....................
55-61 ....................
. .
. .
. .
. .
. .
. .
. .
. .
. .
100 25.3
42.9 22.7 9.1
100 11.2 44.9 33.1 10.8
100 33.7
44.2 15.4 6.8
100 52.9 40.2 5.4 1.5
100 17.4 43.2 24.9
14.6
100 26.0 41.8 23.4 8.9
100
22.4 37.9 28.2 11.4
100 24.1 45.7 20.8 9.5
100 29.5 46.0 18.3
6.3
of entitlement to DI benefits and the
date of posting of the award to the
MBR was calculated.
As the table indicates, about 32
percent of DI awards involved an
entitlement awarded more than 1
year retroactively. Nine percent
involved retroactive entitlement of
more than 2 years. In only 25
percent of cases did the month of
entitlement coincide with or succeed
the month of posting of the award
to the MBR.
The table also indicates
substantial variation in retroactive
DI entitlements by primary
diagnosis of the disabling condition.
Neoplasms and circulatory diseases
resulted in fewer retroactive awards
and in shorter periods of
retroactivity. The majority of awards
for mental disorders and for
impairments of the musculoskeletal
system were associated with
retroactive entitlements of more
than 1 year. Almost 15 percent of
awards for musculoskeletal
diseases and nearly 11 percent for
mental disorders involved
retroactive entitlements of more
than 24 months, compared with
only 2 percent and 7 percent for
neoplasms and circulatory diseases,
respectively.
The degree of retroactivity also
varied by age. Younger
beneficiaries tended to have more
retroactive entitlements with longer
periods of retroactivity than older
beneficiaries. For example, 40
percent of the DI awardees under
age 45 had retroactive entitlement
going back more than 12 months;
only 25 percent of the awardees
aged 55-61 had entitlement
retroactive to more than 12 months.
The differences in retroactivity by
age may be related to the nature of
the disabling condition-for
example, awards to younger
persons are often for mental
disorders; for older workers the DI
awards more frequently tend to be
based on diseases of the circulatory
system. No appreciable differences
were evident between sex or racial
groups (data not shown).
These results indicate that some
arrangements for retroactive
Social Security Bulletin, May 1989IVol. 52, No. 5
13
above, many DI beneficiaries have
some form of health insurance
during the waiting period, and about
half have some form of private
insurance. The Medicare costs
would certainly be lower if Medicare
were a second payer in these
cases. A precedent for making
Medicare a second payer is found
in the coverage arrangement for the
working aged who have health
insurance through their employer.
The estimation of waiting-period
costs with Medicare as second
payer is beyond the scope of this
article. The estimation of such costs
would depend on the
comprehensiveness of existing
private coverage for DI
beneficiaries. It would also depend
on whether or not changes in
current law were enacted to
maintain existing health insurance
patterns for DI beneficiaries. In the
absence of legislation, it is likely
that many employers and insurers
would alter the provisions of their
private insurance plans to reduce or
eliminate coverage during the
waiting period.
The results of the analysis of
retroactive benefits showed more
than 30 percent of a recent award
cohort with more than 12 months of
retroactivity. The impracticality of
covering long retroactive periods
could limit the increases in
Medicare costs if the waiting period
were altered. However, beneficiary
filing patterns might change and
more pressure might be brought to
bear on the disability determination
process to reduce the number of
retroactive months.
It is clear from an examination of
the distribution of increased cost
among beneficiaries with different
programmatic outcomes that
elimination of all or part of the
waiting period is very unlikely to be
cost-beneficial in enabling
beneficiaries to return to work. Most
of the increased costs would be for
expenses of beneficiaries who die
within the first 10 years after DI
entitlement or are near age 65.
These are the beneficiaries who are
least likely to return to work. If
Medicare is first payer, it does not
seem possible that the overall costs
of altering the waiting period could
be recovered by increased DI
program terminations and the long-
run savings that they imply. Many
more beneficiaries would have to
have terminations based on
recovery in addition to the number
that now do so. Thus, it appears
that altering the waiting period
would most likely result in a net
cost to the Medicare trust funds.
Finally, a precedent for
eliminating the 24-month waiting
period for special groups with
extraordinary medical expenses
exists: Beneficiaries with end-stage
renal disease have been exempted
from that waiting period. A similar
arrangement for other groups such
as beneficiaries with AIDS might be
considered. However, it is not clear
how the AIDS group differs from
other beneficiaries who have high
death rates at DI entitlement. Even
the rather broadly constructed
neoplasms group described in the
tables exhibits the same kinds of
needs as beneficiaries with AIDS. If
a special exception were made for
beneficiaries with AIDS, there could
be pressure to include other groups
of disabled workers as well, at least
in those cases where no other
health insurance is available.
Social Security Bulletin, May 1989/Vol. 52, No. 5
15