The Decline in EmployerSponsored Health Insurance for Retirees and Its Impact on Older Americans - PowerPoint PPT Presentation

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The Decline in EmployerSponsored Health Insurance for Retirees and Its Impact on Older Americans

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Title: The Decline in EmployerSponsored Health Insurance for Retirees and Its Impact on Older Americans


1
The Decline in Employer-Sponsored Health
Insurance for Retirees and Its Impact on Older
Americans
  • Erin Strumpf
  • Harvard University
  • strumpf_at_fas.harvard.edu
  • June 24, 2006

Funding from the National Institute on Aging,
Grant Number T32-AG00186, is gratefully
acknowledged.
2
A Major Shift In Retiree Benefits
  • Employer-sponsored health insurance is an
    important source of coverage for older Americans
  • Rates of employer offer of retiree health
    insurance (RHI) have declined from 66 of large
    firms in 1988 to 33 in 2005
  • We can expect future cohorts of retirees will
    have much lower rates of RHI coverage
  • What are the implications for labor force
    participation, risk protection and health?

3
Empirical Strategy
  • Health and Retirement Survey, 1992-2002
  • Panel of respondents aged 47-64 who report having
    employer-sponsored health insurance in 1992 (N
    6,889)
  • Compare outcomes for those with and without an
    RHI offer (1994-2002)
  • Use health shocks to compare the effect of RHI
    offer for those in poor health

4
Identifying Assumptions
  • Effect of retiree health insurance offer
  • Given employer-sponsored coverage, those with and
    without an RHI offer are similar at baseline
  • Differential effects by health status
  • Given baseline health status, health shocks are
    exogenous

5
Full-Time Retirement Before Age 65
  • Retirement it a ß1 RHIoffer i1 ß2
    HealthShock it ß3 RHIoffer i1HealthShockit
    Xit Yeart e
  • Covariates include
  • Respondents and spouses demographics and health
  • Household income and assets
  • Pension information, industry and occupation

6
Estimated Effect of RHI Offer on Full-Time
Retirement
significant at 1, 0.1 Standard errors are
adjusted for the complex survey design and
clustered at the individual level.
7
Other Results
  • RHI offer decreases out-of-pocket spending by 6,
    or 275, on average in the top 40 of the
    spending distribution
  • Among retirees, RHI decreases out-of-pocket
    spending by 21, or 1,300
  • RHI offer has no significant effects on insurance
    coverage
  • Suggestive results that RHI offer increases
    outpatient medical care utilization
  • No evidence of an effect of RHI offer on health

8
Policy Implications
  • The current decline in RHI offer rates is likely
    to impact future cohorts of retirees
  • Decrease early retirement rates
  • Decrease protection from high out-of-pocket
    medical costs
  • Policymakers and researchers should start now to
    examine the efficiency and effectiveness of
    different sources of health insurance coverage
    for the near-elderly population
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