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The role of retiree health insurance in the early retirement of public sector employees

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  • Shoven, John B.
  • Slavov, Sita Nataraj

Abstract

Most government employees have access to retiree health coverage, which provides them with group health coverage even if they retire before Medicare eligibility. We study the impact of retiree health coverage on the labor supply of public sector workers between the ages of 55 and 64. We find that retiree health coverage raises the probability of stopping full time work by 4.3 percentage points (around 38 percent) over two years among public sector workers aged 55–59, and by 6.7 percentage points (around 26 percent) over two years among public sector workers aged 60–64. In the younger age group, retiree health insurance mostly seems to facilitate transitions to part-time work rather than full retirement. However, in the older age group, it increases the probability of stopping work entirely by 4.3 percentage points (around 22 percent).

Suggested Citation

  • Shoven, John B. & Slavov, Sita Nataraj, 2014. "The role of retiree health insurance in the early retirement of public sector employees," Journal of Health Economics, Elsevier, vol. 38(C), pages 99-108.
  • Handle: RePEc:eee:jhecon:v:38:y:2014:i:c:p:99-108
    DOI: 10.1016/j.jhealeco.2014.03.013
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    References listed on IDEAS

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    Cited by:

    1. Byron Lutz & Louise Sheiner, 2014. "The Fiscal Stress Arising from State and Local Retiree Health Obligations," NBER Working Papers 19779, National Bureau of Economic Research, Inc.
    2. Clark, Robert L. & Mitchell, Olivia S., 2014. "How does retiree health insurance influence public sector employee saving?," Journal of Health Economics, Elsevier, vol. 38(C), pages 109-118.
    3. Joshua Congdon-Hohman, 2014. "Retirement Reversals and Health Insurance: the Potential Impact of the Affordable Care Act," Working Papers 1501, College of the Holy Cross, Department of Economics.
    4. Fitzpatrick, Maria D., 2014. "Retiree health insurance for public school employees: Does it affect retirement?," Journal of Health Economics, Elsevier, vol. 38(C), pages 88-98.
    5. Robert Clark & Melinda Morrill, 2013. "Increasing Work Life: The Role Of The Employer," Discussion Papers 13-016, Stanford Institute for Economic Policy Research.
    6. Clark, Robert L. & Morrill, Melinda Sandler & Vanderweide, David, 2014. "The effects of retiree health insurance plan characteristics on retirees’ choice and employers’ costs," Journal of Health Economics, Elsevier, vol. 38(C), pages 119-129.
    7. Helen Levy & Thomas Buchmueller & Sayeh Nikpay, 2015. "The Effect of Health Reform on Retirement," Working Papers wp329, University of Michigan, Michigan Retirement Research Center.
    8. Morrill, Melinda Sandler, 2014. "Active and retired public employees’ health insurance: Potential data sources," Journal of Health Economics, Elsevier, vol. 38(C), pages 147-152.

    More about this item

    Keywords

    Retiree health insurance; Retirement; Public sector workers;

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J4 - Labor and Demographic Economics - - Particular Labor Markets

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