NBER Disability Research Center

NB13-03, Chronic Disease, Functional Status Limitations, and Social Security Disability Payment

Jay Bhattacharya¬ł Stanford University and NBER

Over the past decade, driven in part by rising obesity prevalence, many indicators of chronic disease and disability have deteriorated in the U.S. This change in the health status of the population will have important consequences for both Social Security retirement and disability payments over the coming decades. These health induced changes will operate over and above the well-anticipated demographic changes induced by the aging of the population. We propose to adapt the well-established Future Elderly Model (FEM) to account for these changes in the health status of the population to forecast future Social Security outlays, including SSI, SSDI, and retirement payments. In addition, we propose to ask how policy induced changes in chronic disease prevalence and IADL disability rates will affect future Social Security outlays.