The effect of disability insurance on health care demand

This paper examines the incentive effects of the growth in the Social Security Disability Insurance (DI) system in terms of its impact on individual health care demand. A simple model predicts that DI benefits will reduce the individual's demand for preventive health care (in order to increase their probability of acceptance) while the demand for acute care is not affected. Estimates of health care demand equations for males aged 58-63 confirm the non-effect of DI benefits on acute care, while significant (but small) negative effects of benefits on preventive care are found.