Cash Assistance and Monthly Cycles in Substance Abuse Carlos Dobkin and Steve Puller

Policy Concern About Cash Aid – Substance Abuse Link Politicians and health professionals are concerned that government aid results in increased substance abuse There is also concern that cash aid results in monthly cycle in drug related hospitalizations straining already overloaded emergency rooms.

Politicians have championed Various Changes in Cash Aid Recent changes at the county, state and federal level include –Proposition N (San Francisco) “Care not Cash” Converted General Relief in San Francisco from cash to in kind aid –Welfare Reform Act of 1996 Ended SSI benefits for people categorized as disabled due to substance abuse ??any provisions for TANF and drug addiction??? –Gramm Amendment

Literature on Cycles in Drug Consumption Monthly pattern in deaths (Phillips, NEJM 1999) –14% more substance abuse deaths in first vs. last week of month Monthly pattern in psychiatric admissions (Halpern & Mechem, Am J Med, 2001) –Psychiatric admissions for substance abuse 14% higher first week (vs. 6% for non-substance abuse) Cocaine use among disabled vets (Shaner, NEJM, 1995) –105 male vets on disability with history of schizophrenia & cocaine use –Highest cocaine concentration in body during first 3 days of month, followed by highest number of hospital admissions 3-5 days later

Causes of Drug Cycles is unknown “Fat wallets” early in the month could have a number of causes –Cash infusions at the beginning of the month due to monthly pay checks –Federal transfers (SSI, SSDI) –State transfers (AFDC/TANF, Food Stamps) –Local transfers (General Relief)

Contributions of this paper Document the monthly cycle in hospital admissions and see how it varies by substance Determine which government programs are driving the monthly cycle in admissions Check if alternate disbursal regimes can smooth the monthly cycle in admissions Test if the programs effect the level of admissions or just the timing of admissions

Data California Hospital Discharge Data –Census of hospitalizations –Includes patient demographics, cause of hospitalization and treatment provided Medi-Cal Eligibility Data –Linked to hospital data –Includes individuals receiving welfare and Supplemental Security Income for Aged Blind or Disabled –Does not include General Relief or Disability Insurance

I don’t understand why we exclude 29-31? It’s not a technical problem in creating – that’s easy. 30 and 31 (and once 28) must just be interpreted slightly differently. Also, is excluding last 3 consistent with fact we show leaves for last 3 days.

Is is true that this is roughly flat for non-drug? So we can confidently say that this isn’t driven by some perverse incentives created by Medicaid

Cycles in Admissions Hospital admissions with a mention of alcohol or illicit drugs are high in the beginning of the month. The monthly cycle is particularly pronounced for cocaine and amphetamine There is a cycle in people exiting the hospital with a peak at the beginning of the month and a second peak on the third of the month

Possible Causes of the Cycle Monthly Paychecks Supplemental Security Income –For the aged. blind or disabled – 5 month waiting period –Approximately 1 Million recipients state-wide, two-thirds disabled –Benefits average about $600/month for individuals ($1100/month couples) –Checks arrive on the 1 st (or last previous business day if on weekend) Disability Income –Replacement rate varies with income –Aid arrives 3 rd of month Welfare –County administered program for Families –Largest of the programs with 2 million recipients statewide –Benefits about $550/month in 1997 –Checks typically arrive on the first but there is variation by county General Relief –County run program for indigent adults (varies by county typically about $250 per month) Unemployment Insurance –Paid bi-weekly Workers’ Compensation –Some benefits paid bi-weekly Supply side factors?

Programs and the cycles in admissions Welfare has only a very weak cycle in admissions Very strong cycle in admissions for SSI recipients particularly for illicit drugs Indirect evidence of a cycle for people receiving DI –Can identify likely DI recipients because they are Medicare recipients under 65. –Cycle in admissions –Peak in exits on the third The overall cycle appears to be due largely to SSI and DI Peoples exit patterns particularly AMA patterns are consistent with them heading home to pick up their checks.

WILL ALTERNATE DISBURSAL SCHEMES REDUCE CYCLE? Hospital Emergency Rooms in California are crowded Many of the ER resources are fixed Cyclical crowding is bad Will smoothing the check disbursal smooth the cycle

(LA Pre vs. Post Analysis -- Notes to ourselves) Keep in mind that this analysis is for a population (welfare) that doesn’t show much of a cycle anyway We do 3 ways: raw means, regression adjusted, and testing it statistically Basic conclusion: –Cycle: see pretty convincing shift of cycle for drugs, but only slightly for alcohol or other non-drug conditions –Levels: highly confounded w/ other changes from welfare reform so we cannot isolate the effect Not surprising: Policy does not change “fat wallet” at the individual level

Empirical Evidence on Alternative Disbursement Regimes Los Angeles county disbursement of AFDC/TANF –Pre June 1997: Day 1 –Post June 1997: Staggered Days 1-10 based on case number (recipients could pick up at issuance outlet after designated day) –Effect: Individuals still have “fat wallets”, but everybody doesn’t have them at the same time DI changed in May 1997 –Post may 1997 new recipients instead of getting on the third of the month get second third or fourth weds depending on day of birth Questions –Does aggregate cycle change? –(Recall: welfare recipients show relatively small cycle)

Pre vs Post June 1997 Drug Mentions - Means

Pre vs Post June 1997 Alcohol Mentions - Means

Pre vs Post June 1997 Non-drug Admits - Means

Statistical Test

Notes to Us –“treatment effect of SSI” there is a 5 month waiting period from time of disability to eligibility to receive benefits (although this can be waived and we don’t know if an individual get’s it waived – do we know % that get waived??) we can see individuals about to go on SSI who were previously on another medical program (2 largest are non-cash disability for the medically needs and TANF cash assistance) and those who just went on SSI – arguably these people are similar in the window of time around the transition (although those just on may be a little worse off) 2 definitions of “Just Went On” and “About To Go On” 1 month window Just went on = SSI this month, non-SSI (but medical) last month About to go on == no SSI this month (but some medical), SSI next month ??any worry about the length of stay or timing of exactly when become eligible?? 2 month window »just went on == recipients who are eligible in the current month and the previous month, but not 2 months ago »about to go on == patients who are not currently on SSI (but are on some other Medical program in our dataset), will not be on next month, but are eligible for SSI in the 2nd following month (we do this due to length of stay issues crossing over into next month) we test for the effect on both the cycle and level of treating these people with SSI cash aide Caveat: this is a small sample (estimating level effect off of 2738 admits for the 1 week window and 2259 admits for the 2 week window)

Recipients Transitioning Onto SSI Drugs – 1 Month Window

Recipients Transitioning Onto SSI Drugs – 2 Month Window

Simulated Effect on Aggregate Drug Cycle of Disbursing SSI, SSDI and Welfare with a Day1-10 Scheme Assume –Cycles for certain subpopulations entirely driven by timing of aide disbursement –Consumption pattern independent across groups (no “agglomeration economies” to consumption) Simulate Aggregate cycle –Take observed cycle (from single day disbursement) & simulate the cycle if 1/10 th of recipients = day 1, 1/10 th =day 2, …, 1/10 th = day 10 –SSI: from Day 1 to Days 1-10 –SSDI (proxied by Medicare): from Day 3 to Days 1-10 –Welfare outside LA post 97: Day 1 to Days 1-10 –Welfare in LA post 97: keep the same observed cycle –All others (employed, UI, others) keep the same

INCLUDE RESULTS FROM LOOKING AT DI

SUM UP THE GAINS FROM SWITCHING REGIMES Smoother welfare admissions despite the fact that welfare is pretty flat If similar change in disbursement in all programs occurred for all programs you would expect a big effect

ALSO

Effect of Disbursement Change on Levels? We have seen compelling evidence that Welfare, SSI and DI cause a cycle in admissions People take this as proof that government transfers also significantly change the number of admissions Two approaches –County level changes in loads Abrupt Change in SSI due to Federal Law Long term reduction in welfare loads Of Unknown origin ie panel approach –Micro Analysis (note less compelling) Look at people going onto welfare Look at people going onto SSI

REGRESSSION RESULTS CROSS-SECTION AND PANEL

REGRESSION RESULTS ON SPIKE

CASE STUDY OF SSI CHANGE CHANGE IN SPIKE

POINT OUT HUDE DECLINE IN WELFARE NO PERCEVABLE DECLINE IN DRUG ADMISSIONS RATES

TS Counts of admissions overall and by SSI, Welfare and NON SSI NON WELFARE

CHANGE IN LEVELS

MICRO ANALYSIS LOOK AT PEOPLE TRANSITIONING ONTO PROGRAM

SUM UP RESULTS DOES IT CHANCE CYCLES DOES IT CHANGE LEVELS

CONCLUSIONS Which program drive spike Can smooth spike Levels harder to reduce

OLD STUFF

What we

Daily Average California Hospital Admissions for Drug Use

Cycles in Injuries & Violence?

Cycles in Other Admissions?

Cycles in Leaves Against Medical Advice

Research Design

Data

Drug Admission by Cash Aide Type Regression Context First cut = linear. Later = count data model

Exploiting County-Level Variation in Disbursement –1997: LA switched AFDC/CalWORKs disbursement from Day 1 to staggered over first 10 days

Individual Level Analysis Ideal experiment: –Randomly assign aide receipt day 1, day2, …and compare patterns of admission Pseudo-experiment: –Some counties disburse based on last digit of case # Estimate Pr(admission) = f(days since receipt, days since first of month,…) Data available?

Policy Implications 15-20% of welfare recipients self-report to drug use, with one-fifth of those dependent (Pollack et al., 2002) Average charge per admit: $xx,xxx Possibly smooth cycle or reduce levels of substance use with: –Smoothing disbursal (debit cards) –Substitute in-kind for cash aide Even if consumption/admits don’t decrease: –Smooth hospital caseloads or policing activities

Extra Slides

Basic Demographics of CA in 1996 Source: Urban Institute, 1998

Pattern By Day of Week