Modeling SSI financial eligibility and simulating the effect of policy options

Area of Science:

• Economics
• Public Policy
• Social Welfare

Background:

• Millions of elderly individuals are eligible for Supplemental Security Income (SSI) but a significant portion do not participate.
• Understanding factors influencing SSI participation is crucial for effective social welfare policy design.
• Existing financial eligibility standards may create barriers to program access for vulnerable elderly populations.

Purpose of the Study:

• To simulate SSI eligibility and participation rates among the elderly population.
• To analyze demographic and socioeconomic factors influencing SSI participation.
• To evaluate the potential impacts of modifying financial eligibility standards on poverty, costs, and participation.

Main Methods:

• Utilized 1991 microdata from the Survey of Income and Program Participation (SIPP) matched with administrative records.
• Applied program rules to simulate SSI eligibility and participation under various policy alternatives.
• Employed a probit model to identify factors affecting participation among eligible individuals.

Main Results:

• Approximately 6.6% of the noninstitutionalized elderly were eligible for SSI in 1991, with only 63% participating.
• Increasing the general income exclusion (GIE) showed the most significant potential for reducing poverty and increasing participation.
• Policy interventions that increase participation and reduce poverty generally incur higher program costs.

Conclusions:

• Modifying financial eligibility standards, particularly the GIE, can substantially increase SSI participation and decrease elderly poverty.
• There is a trade-off between the magnitude of policy effects (participation, poverty reduction) and program costs.
• Data from SIPP matched with administrative records provide a robust basis for simulating SSI program impacts.