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Health insurance costs and early retirement decisions

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Author Info

  • Richard W. Johnson
  • Amy J. Davidoff
  • Kevin Perese

Abstract

The loss of health insurance may be an important component of the cost of retirement, especially for workers without retiree health insurance coverage. The authors find that insurance costs significantly reduce retirement rates for full-time wage and salary workers ages 51 to 61. Simulations suggest that a $1,000 increase in the net present value of health insurance premium costs reduces the probability of early retirement by 0.17 percentage points for men and by 0.24 percentage points for women, corresponding to elasticities of -0.22 and -0.24, respectively. The authors' models predict that expanding the Medicare program to cover those aged 62-64 would increase retirement rates for workers with employer-sponsored coverage who lack retiree benefits, if the government subsidizes their coverage. However, the impact would be small, increasing overall retirement rates by only 7%. (Author's abstract.) (Free full-text download available at http://digitalcommons.ilr.cornell.edu/ilrreview/.)

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Bibliographic Info

Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

Volume (Year): 56 (2003)
Issue (Month): 4 (July)
Pages: 716-729

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Handle: RePEc:ilr:articl:v:56:y:2003:i:4:p:716-729

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Citations

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Cited by:
  1. Luca Spataro, 2002. "New Tools in Micromodeling Retirement Decisions: Overview and Applications to the Italian Case," Computing in Economics and Finance 2002, Society for Computational Economics 109, Society for Computational Economics.
  2. Owen Haaga & Richard W. Johnson, 2012. "Social Security Claiming: Trends and Business Cycle Effects," Working Papers, Center for Retirement Research at Boston College wp2012-5, Center for Retirement Research, revised Feb 2012.
  3. James Marton & Stephen A. Woodbury, 2007. "Retiree Health Benefit Coverage and Retirement," Book chapters authored by Upjohn Institute researchers, W.E. Upjohn Institute for Employment Research, in: Dimitri B. Papadimitriou (ed.), Government Spending on the Elderly, pages 222-242 W.E. Upjohn Institute for Employment Research.
  4. Richard W. Johnson, 2004. "How Closely Do Spouses Coordinate Thier Retirement Decisions?," Others, EconWPA 0408006, EconWPA.
  5. Fairlie, Robert W. & Kapur, Kanika & Gates, Susan, 2013. "Job Lock: Evidence from a Regression Discontinuity Design," IZA Discussion Papers 7785, Institute for the Study of Labor (IZA).
  6. Brigitte Madrian, 2006. "The U.S. Health Care System and Labor Markets," NBER Working Papers 11980, National Bureau of Economic Research, Inc.
  7. Jody Schimmel, 2006. "Men With Health Insurance and the Women Who Love Them: the Effect of a Husband's Retirement on His Wife's Health Insurance Coverage," Working Papers, University of Michigan, Michigan Retirement Research Center wp131, University of Michigan, Michigan Retirement Research Center.
  8. Boyle, Melissa A. & Lahey, Joanna N., 2010. "Health insurance and the labor supply decisions of older workers: Evidence from a U.S. Department of Veterans Affairs expansion," Journal of Public Economics, Elsevier, Elsevier, vol. 94(7-8), pages 467-478, August.
  9. Justina A.V. Fischer & Alfonso Sousa-Poza, 2006. "The Institutional Determinants of Early Retirement in Europe," University of St. Gallen Department of Economics working paper series 2006, Department of Economics, University of St. Gallen 2006-08, Department of Economics, University of St. Gallen.
  10. Barbara A. Butrica & Karen E. Smith & C. Eugene Steuerle, 2006. "Working for a Good Retirement," Economics Working Paper Archive, Levy Economics Institute wp_463, Levy Economics Institute.
  11. Alice Zawacki & Christine Eibner & Elaine Zimmerman, 2009. "Older Workers’ Access to Employer-Sponsored Retiree Health Insurance, 2000–2006," Journal of Labor Research, Springer, Springer, vol. 30(4), pages 350-364, December.
  12. Gordon B.T. Mermin & Richard W. Johnson & Dan Murphy, 2006. "Why Do Boomers Plan to Work So Long?," Working Papers, Center for Retirement Research at Boston College wp2006-19, Center for Retirement Research, revised Nov 2006.
  13. Joshua Congdon-Hohman, 2006. "The Impact of Health Insurance Availability on Retirement Decision Reversals," Working Papers, University of Michigan, Michigan Retirement Research Center wp137, University of Michigan, Michigan Retirement Research Center.
  14. Richard W. Johnson, 2007. "What Happens to Health Benefits after Retirement?," Work Opportunity Briefs, Center for Retirement Research wob_7, Center for Retirement Research, revised Feb 2007.
  15. James Marton & Stephen A. Woodbury, 2010. "The Influence of Retiree Health Benefits on Retirement Patterns," Upjohn Working Papers and Journal Articles, W.E. Upjohn Institute for Employment Research 10-163, W.E. Upjohn Institute for Employment Research.
  16. James Marton & Stephen A. Woodbury, 2006. "Retiree Health Benefits and Retirement," Upjohn Working Papers and Journal Articles, W.E. Upjohn Institute for Employment Research 06-128, W.E. Upjohn Institute for Employment Research.

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