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Health insurance and retirement of married couples

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  • Donna B. Gilleskie

    (University of North Carolina at Chapel Hill, NC, USA)

  • David M. Blau

    (University of North Carolina at Chapel Hill, NC, USA)

Abstract

Most health insurance in the USA is provided by employers until eligibility for public health insurance (Medicare) begins at age 65. Retiring before 65 exposes workers who lack retiree health insurance coverage to the risk of catastrophic medical expenditure. We solve and estimate a dynamic model of the employment behavior of older married couples that includes risky medical expenditure and health insurance. Parameter estimates imply that the risk-reducing feature of health insurance can account for about half of the observed association between retiree health insurance and employment for married men, but can account for only one tenth of the much larger observed association for married women. Policy simulations imply very small effects on employment of changing the age of eligibility for Medicare from 65 to 67. Copyright © 2006 John Wiley & Sons, Ltd.

Suggested Citation

  • Donna B. Gilleskie & David M. Blau, 2006. "Health insurance and retirement of married couples," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(7), pages 935-953.
  • Handle: RePEc:jae:japmet:v:21:y:2006:i:7:p:935-953 DOI: 10.1002/jae.921
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    References listed on IDEAS

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    1. Blau, David M, 1998. "Labor Force Dynamics of Older Married Couples," Journal of Labor Economics, University of Chicago Press, vol. 16(3), pages 595-629, July.
    2. Starr-McCluer, Martha, 1996. "Health Insurance and Precautionary Savings," American Economic Review, American Economic Association, vol. 86(1), pages 285-295, March.
    3. Hurd, Michael D, 1989. "Mortality Risk and Bequests," Econometrica, Econometric Society, vol. 57(4), pages 779-813, July.
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