Some disabled workers uninsured during two-year wait for Medicare

March 31, 2008

University Park, Pa. -- About one-quarter of disabled workers under age 65 who start receiving Social Security Disability Income (SSDI) are uninsured during the two years they must wait to obtain Medicare benefits, according to a study published online by the journal Health Affairs. Employers cover about half of those in the waiting period, according to researchers Pamela Farley Short of Penn State and France Weaver of Swiss Health Observatory in Neuchatel, Switzerland.

When Medicare was originally extended to people with disabilities in 1972, the waiting period was included to save money, preserve existing insurance and prevent people with less severe or temporary disabilities from seeking insurance through the Social Security system. However, prompted by heartbreaking stories of people with severe disabilities who struggle to get through the waiting period without health insurance, federal legislators have introduced bills to eliminate the waiting period during each of the last two Congresses.

Using longitudinal data from the University of Michigan’s Health and Retirement Study, Short and Weaver followed through time a randomly selected, nationally representative sample of Americans born during the period 1936-1941. By tracking each individual’s health insurance from age 55 to age 65, Short and Weaver found that fully half of the people who lacked insurance during the Medicare waiting period were uninsured before they began receiving SSDI.

The loss of employer insurance accounted for only 36 percent of those uninsured in the waiting period. Relatively few people who were initially covered by employers became uninsured during the waiting period (12 percent). Three-quarters retained employer insurance through spouses or former employers after they were no longer able to work.

“Our findings suggest that eliminating the waiting period would indeed be the best way to cover people with disabilities who are uninsured without Medicare,” said Short, professor of health policy and administration at Penn State. “The incomes of the uninsured are typically low -- even when working -- and they have little access to other sources of insurance. However, with half of disabled workers currently getting coverage from employers, eliminating the waiting period for everyone would displace a lot of existing private coverage and burden Medicare with the cost of caring for people who already have insurance.”

Rather than eliminating the waiting period entirely, Congress might consider eliminating it only for disabled workers without access to employer-sponsored insurance, Short and Weaver suggested.

“From the government’s perspective, even with generous subsidies to new SSDI recipients to defray the cost of employer premiums, premium subsidies would likely cost less than enrolling people with severe disabilities in Medicare. Because premiums are based on claims averaged over all enrollees, and the average claims of people with disabilities are likely to be well above the employer average, the government could save money by paying premiums to employers instead of claims under Medicare,” they wrote.

Short and Weaver pointed out that Americans have a bigger stake in this debate than annual estimates of Medicare disability enrollment might suggest: In any given year, Medicare covers just 2.5 percent of the noninstitutionalized population under age 65, but Short and Weaver found that just over 15 percent (one out of six) people alive at age 55 were on Medicare before age 65 and therefore had to negotiate the waiting period.

For African Americans the stakes are particularly high: One in three African Americans were covered by Medicare before turning 65, compared to 12.9 percent of whites. More than one-quarter of widowed people and almost four in 10 people with incomes below the federal poverty level at age 55 also moved on to the Medicare rolls before age 65.

Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at

Last Updated March 19, 2009