The hidden costs of Disability Insurance reassessment

CHE RESEARCH BITES

By Samia Badji

Published: 28 June, 2023

What appeared to be a logical response to contain the costs of a surging number of Disability Income Insurance recipients worsened recipient mental health and actually increased healthcare spending.

To address a steep rise in Disability Income Insurance recipients, several OECD countries tightened eligibility and reassessed current beneficiaries to reduce their numbers and costs.

Such reassessments can carry an economic cost and take a toll on recipients’ health in a number of ways. Healthcare use may increase as recipients need to visit healthcare professionals for evidence that they meet the new eligibility criteria. Recipients who lose eligibility may be encouraged to find work, but most end up relying on less generous unemployment benefits, causing financial instability. This can harm health when people forego medical services because they can no longer afford them. Those who remain eligible may still see their health suffer from the stress of reassessment or the ongoing threat of removal.

Centre for Health Economics’ @Samia Badji and @Dennis Petrie and co-author Anne Kavanagh examined the impact of an Australian policy reform that reassessed under-35 disability income insurance recipients against stricter criteria.

They found that the policy implementation was followed by a rise in prescriptions for nervous system drugs - such as antidepressants - and visits to GPs and Specialists for under-35 recipients who were still eligible. These changes highlight an increase in healthcare spending and suggest a worsening of mental health for those under reassessment.

Future reforms of disability insurance eligibility and evaluations of such policies should consider the health consequences of re-assessing recipients and potential increased healthcare costs.

Find the original article here: Badji, S., Kavanagh, A., & Petrie, D. (2023). The impact of Disability Insurance reassessment on healthcare use. Health Economics, 32(7), 1581–1602. https://doi.org/10.1002/hec.4680

Read more about this research and its implications in Australia: NDIS cost scrutiny is intensifying again – the past shows this can harm health and wellbeing for people with disability

CHE Research Bites are short, easy-to-understand summaries of our recent academic papers highlighting new evidence and insights on topical issues in the health and healthcare sectors.

Interested in hearing the latest from the Centre for Health Economics? Sign up to our newsletter. Follow us on X and LinkedIn.

Find out more about the Disadvantage and health research theme.