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Health Status, Insurance, and Expenditures in the Transition from Work to Retirement

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Author Info

  • Hugo Benitez-Silva

    ()
    (Dept. of Economics, SUNY at Stony Brook)

  • Moshe Buchinsky

    (UCLA and NBER)

  • John Rust

    (University of Maryland)

  • Emine Boz

    (University of Maryland)

  • Joseph B. Nichols

    (Board of Governors of the Federal Reserve System)

  • Sharbani Roy

    (NERA)

  • Ignez Tristao

    (University of Maryland)

Abstract

This paper analyzes the dynamics of health insurance coverage, health expenditures, and health status in the decade expanding from 1992 to 2002, for a cohort of older Americans. We follow 13,594 individuals interviewed in Waves 1 to 6 of the Health and Retirement Study, most of whom were born between 1930 and 1940, as they transition from work into retirement. Although this “depression cohort” is by and large fairly well prepared for retirement in terms of pension coverage and savings, we identify significant gaps in their health insurance coverage, especially among the most disadvantaged members of this cohort. We find that government health insurance programs—particularly Medicare and Medicaid—significantly reduce the number of individuals who are uninsured and the risks of large out of pocket health care costs. However, prior to retirement large numbers of these respondents were uninsured, nearly 18% at the first survey in 1992. Moreover, a much larger share, about 55% of this cohort, are transitorily uninsured, that is, they experience one or more spells, lasting from several months to several years, without health insurance coverage. We also identify a much smaller group of persistently uninsured individuals, and show that this group has significantly less wealth, and higher rates of poverty, unemployment, and health problems, disability, and higher mortality rates than the rest of the members of the cohort under study. We provide evidence that lack of health insurance coverage is correlated with reduced utilization of health care services; for example, respondents with no health insurance visit the doctor one fourth as often as those with private insurance and are also more likely to report declines in health status. We also analyze the components of out of pocket health care costs, and show that prescription drug costs constituted a rapidly rising share of the overall cost of health care during the period of analysis.

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File URL: http://ms.cc.sunysb.edu/~hbenitezsilv/inspaper.pdf
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Bibliographic Info

Paper provided by Stony Brook University, Department of Economics in its series Department of Economics Working Papers with number 05-11.

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Date of creation: Jun 2005
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Handle: RePEc:nys:sunysb:05-11

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  1. Williams, Alan & Cookson, Richard, 2000. "Equity in health," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 35, pages 1863-1910 Elsevier.
  2. 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.
  3. Feenberg, Daniel & Skinner, Jonathan, 1994. "The Risk and Duration of Catastrophic Health Care Expenditures," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 633-47, November.
  4. Rogowski, Jeannette & Karoly, Lynn, 2000. "Health insurance and retirement behavior: evidence from the health and retirement survey," Journal of Health Economics, Elsevier, vol. 19(4), pages 529-539, July.
  5. Cutler, David M. & Zeckhauser, Richard J., 2000. "The anatomy of health insurance," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 11, pages 563-643 Elsevier.
  6. Matthew J. Eichner & Mark B. McClellan & David A. Wise, 1996. "Insurance or Self-Insurance?: Variation, Persistence, and Individual Health Accounts," NBER Working Papers 5640, National Bureau of Economic Research, Inc.
  7. Robin L. Lumsdaine & Olivia S. Mitchell, . "New Developments in the Economic Analysis of Retirement," Pension Research Council Working Papers 98-8, Wharton School Pension Research Council, University of Pennsylvania.
  8. Eric French & John Bailey Jones, 2004. "On the distribution and dynamics of health care costs," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(6), pages 705-721.
  9. Currie, Janet & Madrian, Brigitte C., 1999. "Health, health insurance and the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 50, pages 3309-3416 Elsevier.
  10. Alan L. Gustman & Olivia S. Mitchell & Thomas L. Steinmeier, 1994. "Retirement Research Using the Health and Retirement Survey," NBER Working Papers 4813, National Bureau of Economic Research, Inc.
  11. Sherry Glied, 2003. "Health Care Costs: On the Rise Again," Journal of Economic Perspectives, American Economic Association, vol. 17(2), pages 125-148, Spring.
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