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Health Insurance and Early Retirement: Evidence from the Availability of Continuation Coverage

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Author Info
Jonathan Gruber
Brigitte Madrian

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Abstract

Although the vast majority of working individuals aged 55-64 receive health insurance coverage through their employment, many of these individuals face the prospect of losing such coverage should they retire before becoming eligible for guaranteed public coverage through Medicare at age 65. Because the expected medical expenses of this group are large and uncertain, the availability of health insurance coverage after retirement could be a key factor in the retirement decision of older workers. We examine the effect of health insurance on retirement by looking at variation in state and federal 'continuation of coverage' mandates, laws which allow individuals to continue purchasing health insurance through a previous employer for a specified number of months after leaving the firm. By allowing individuals to maintain their employer-provided health insurance after retirement, these laws decrease the cost of early retirement for those who do not have other retiree health insurance available. Using data on 55-64 year old men from the Current Population Survey, we find that one year of continuation benefits increases the probability of being retired by 1 percentage point; this represents a 5.4 percent increase in the baseline probability of being retired for this group. We also find that continuation mandates increase the likelihood of being insured after retirement.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4594.

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Date of creation: Dec 1993
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Handle: RePEc:nbr:nberwo:4594

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Heckman, J.J. & Hotz, V.J., 1988. "Choosing Among Alternative Nonexperimental Methods For Estimating The Impact Of Social Programs: The Case Of Manpower Training," University of Chicago - Economics Research Center 88-12, Chicago - Economics Research Center.
    Other versions:
  2. Burtless, Gary, 1986. "Social Security, Unanticipated Benefit Increases, and the Timing of Retirement," Review of Economic Studies, Blackwell Publishing, vol. 53(5), pages 781-805, October. [Downloadable!] (restricted)
  3. Gruber, J. & Madrian, B.C., 1994. "Health Insurance Availability and the Retirement Decision," Working papers 94-04, Massachusetts Institute of Technology (MIT), Department of Economics.
    Other versions:
  4. Robin L. Lumsdaine & James H. Stock & David A. Wise, 1992. "Three Models of Retirement: Computational Complexity versus Predictive Validity," NBER Chapters, in: Topics in the Economics of Aging, pages 21-60 National Bureau of Economic Research, Inc. [Downloadable!]
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  5. Glenn T. Sueyoshi, 1989. "Social Security and the Determinants of Full and Partial Retirement: A Competing Risks Analysis," NBER Working Papers 3113, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Gruber, J., 1992. "State Mandated Benefits and Employer Provided Health Insurance," Working papers 92-18, Massachusetts Institute of Technology (MIT), Department of Economics.
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  7. Gruber, J., 1992. "The Efficiency of a Group-Specific Mandated Benefit: Evidence from Health Insurance Benefits for Maternity," Working papers 92-19, Massachusetts Institute of Technology (MIT), Department of Economics.
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  8. Louis S. Jacobson & Robert J. LaLonde & Daniel Sullivan, 1992. "Earnings Losses of Displaced Workers," Staff Working Papers 92-11, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
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  9. Stock, James H & Wise, David A, 1990. "Pensions, the Option Value of Work, and Retirement," Econometrica, Econometric Society, vol. 58(5), pages 1151-80, September. [Downloadable!] (restricted)
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  10. Bound, John & Waidmann, Timothy, 1992. "Disability Transfers, Self-Reported Health, and the Labor Force Attachment of Older Men: Evidence from the Historical Record," The Quarterly Journal of Economics, MIT Press, vol. 107(4), pages 1393-419, November. [Downloadable!] (restricted)
  11. Robin L. Lumsdaine & James H. Stock & David A. Wise, 1992. "Pension Plan Provisions and Retirement: Men & Women, Medicare, and Models," NBER Working Papers 4201, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Hurd, Michael D, 1990. "Research on the Elderly: Economic Status, Retirement, and Consumption and Saving," Journal of Economic Literature, American Economic Association, vol. 28(2), pages 565-637, June. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. John Rust & Christopher Phelan, 1994. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Public Economics 9406005, EconWPA, revised 06 Jul 1994. [Downloadable!]
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  2. repec:fth:prinin:323 is not listed on IDEAS
  3. Jonathan Gruber & Brigitte C. Madrian, 1993. "Limited Insurance Portability and Job Mobility: The Effects of Public Policy on Job-Lock," NBER Working Papers 4479, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Julie Zissimopoulos & Lynn A. Karoly, 2003. "Transitions to Self-Employment at Older Ages: The Role of Wealth, Health, Health Insurance, and Other Factors," Working Papers 135, RAND Corporation Publications Department. [Downloadable!]
    Other versions:
  5. Jonathan Gruber & Jeffrey Kubik, . "Health Insurance Coverage and the Disability Insurance Application Decision," Working Papers, Center for Retirement Research at Boston College 2002-04, Center for Retirement Research. [Downloadable!]
  6. David Cutler & Jonathan Gruber, 2001. "Health Policy in the Clinton Era: Once Bitten, Twice Shy," NBER Working Papers 8455, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. David M. Blau & Donna B. Gilleskie, 1997. "Retiree Health Insurance and the Labor Force Behavior of Older Men in the 1990s," NBER Working Papers 5948, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  8. David M. Blau & Donna B. Gilleskie, 2003. "The Role of Retiree Health Insurance in the Employment Behavior of Older Men," NBER Working Papers 10100, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  9. Jonathan Gruber & Brigitte C. Madrian, 1993. "Health Insurance Availability and the Retirement Decision," NBER Working Papers 4469, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  10. Alan Krueger, 1994. "Observations on Employment-Based Government Mandates, With Particular Reference to Health Insurance," Working Papers 702, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  11. Kanika Kapur & Jeannette Rogowski, 2006. "Love or Money? Health Insurance and Retirement Among Married Couples," NBER Working Papers 12273, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  12. Jonathan Gruber & Jeffrey Kubik, 2002. "Health Insurance Coverage and the Disability Insurance Application Decision," NBER Working Papers 9148, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  13. Eric French & John Bailey Jones, 2001. "The effects of health insurance and self-insurance on retirement behavior," Working Paper Series WP-01-19, Federal Reserve Bank of Chicago. [Downloadable!]
    Other versions:
  14. Andrew Samwick & David A. Wise, 2003. "Option Value Estimation with Health and Retirement Study Data," NBER Chapters, in: Labor Markets and Firm Benefit Policies in Japan and the United States, pages 205-228 National Bureau of Economic Research, Inc. [Downloadable!]
  15. David R. Weir & Robert J. Willis, 2003. "Widowhood, Divorce, and Loss of Health Insurance Among Near Elderly Women: Evidence from the Health and Retirement Study," Working Papers wp040, University of Michigan, Michigan Retirement Research Center. [Downloadable!]
  16. Brigitte Madrian, 2006. "The U.S. Health Care System and Labor Markets," NBER Working Papers 11980, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  17. Robin L. Lumsdaine & James H. Stock & David A. Wise, 1995. "Why are Retirement Rates So High at Age 65?," NBER Working Papers 5190, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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