The impact of Disability Insurance reassessment on healthcare use

Several Organisation for Economic Co-operation and Development countries have constrained Disability Income Insurance (DI) eligibility and reassessed those on DI to encourage workforce participation. But these policies can also have unintended consequences. While receiving less income can directly worsen physical and mental health, the stress related to reassessment and the possibility of losing DI may also adversely affect mental health. This paper uses Australian population-wide administrative data to explore how a 2014 policy - where DI recipients under 35 were reassessed under stricter criteria - affected healthcare use. We exploit this age targeting using a difference-in-difference regression design and find that the policy increased nervous system drug prescriptions (which includes antidepressants). Our findings suggest that the reassessment of DI recipients, even without income loss, may have had a significant negative impact on their mental health. DI reassessment policies may have the unintended consequence of worsening mental health and this needs be considered when deciding if reassessment is worthwhile.