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The Financial Burden of Health Expenses in Retirement

Author

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  • Bérangère Legendre
  • Sarah Le Duigou

Abstract

At retirement, out-of-pocket (OOP) healthcare spending may increase for two reasons: an increase in the consumption of healthcare services and the loss of employer-funded insurance coverage. In this paper, we assess the effect of retirement on OOP health expenditures in France and consider different effects based on income level to better understand the implications for the standard of living of retirees and inequalities among this population. Using the 7th wave of the Survey on Health, Ageing and Retirement in Europe, we present an instrumental variable (IV) model taking into consideration the discontinuity in the potential to retire. We conclude that retirement increases OOP health spending by 148% at equal healthcare use and this increase is greater among higher-income earners. For the wealthiest 50%, this increase in OOP healthcare spending accompanies an increase in the consumption of healthcare services, in particular outpatient care.

Suggested Citation

  • Bérangère Legendre & Sarah Le Duigou, 2022. "The Financial Burden of Health Expenses in Retirement," Revue d'économie politique, Dalloz, vol. 132(4), pages 615-648.
    • Handle: RePEc:cai:repdal:redp_324_0615
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    More about this item

    Keywords

    Retirement; health Insurance; health Inequality; J26; I13; I14;
    All these keywords.

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality

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