Retirement and healthcare utilization

Pension systems and reforms thereof are often discussed in the context of financial viability. In industrialized countries, these debates grow in intensity with the aging of the population; however, an increase in the retirement age may create unintended side effects with regard to retirees' health or healthcare costs. This study empirically analyzes the effect of (early) retirement on individual inpatient and outpatient healthcare utilization in Austria. We use comprehensive labor market and retirement data from the Austrian Social Security Database, together with detailed information about individual inpatient and outpatient healthcare service utilization in the province of Upper Austria. To account for endogeneity in retirement decisions, we exploit exogenous variation in the early retirement age as induced by two Austrian pension reforms (i.e., those in 2000 and 2003). We find a significant negative effect of retirement on service utilization. For both genders, retirement reduces subsequent doctor visits and expenditure for outpatient medical attendance and hospitalization. Based on the analysis of disaggregated components of services and expenditure, we interpret the results as evidence for positive health effects and behavioral changes in the utilization of healthcare services after retirement.