What can We Learn from State Disability Insurance Programs?
- Five states (CA, HI, NJ, NY, RI) are unique, having offered or mandated temporary disability insurance (TDI) to eligible workers for decades.
- In theory, introducing TDI in a state (or nationwide) could either reduce or increase long-run labor force participation, which is an important question to answer for policymakers.
- Features of the TDI programs in California and Rhode Island likely lead to cross-state differences in participation and duration, but participant diagnoses are similar in the two states.
- Those exhausting TDI benefits in California are similar to those entering SSDI along several dimensions, although new SSDI awardees are older than TDI benefit exhausters and less likely to enter because of injuries.
Five states—California, Hawaii, New Jersey, New York, and Rhode Island—are unique, having offered or mandated some form of temporary disability insurance(TDI) to eligible workers for decades. These programs offer wage replacement, for a limited duration, to workers who cannot work due to off-the-job medical conditions. The programs differ by state in how they are funded and administered and in their generosity and duration of benefits. Although the five state TDI programs have been around for decades, no research has been done on their effectiveness in improving outcomes for workers and the implications for other state and federal programs. Still, the little we do know about TDI claimants and their outcomes, and lessons learned from other social insurance programs, seems important as we consider new options for medical leave policies. In this paper I (1) provide background information on the five state TDI programs, (2) discuss what studies of other social insurance programs suggest for how TDI affects labor force participation, (3) summarize recent research findings based on analyses of TDI data in California and Rhode Island, (4) consider future research options to address important unanswered questions, and (5) discuss policy implications.