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The Role of Retiree Health Insurance in the Early Retirement of Public Sector Employees

  • John B. Shoven
  • Sita Slavov

Most private sector workers with employer-provided health insurance have a strong incentive to continue working until Medicare eligibility in order to maintain group health coverage. However, most government employees have access to retiree health coverage, which allows them access to group health coverage even if they retire before Medicare eligibility. We study the impact of retiree health coverage on the probability of stopping work among public sector workers between the ages of 55 and 64. We find that, for state and local government employees, retiree health coverage raises the probability of stopping work by 5.1 percentage points (around 28 percent) between ages 60 and 64. However, we find no evidence that retiree health coverage influences state and local employees' decisions to stop work at ages 55-59, or that such coverage has an effect on the probability of stopping work for federal and military employees.

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File URL: http://www.nber.org/papers/w19563.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19563.

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Date of creation: Oct 2013
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Publication status: published as 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:nbr:nberwo:19563
Note: AG
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  1. Eric French and John Jones, 2001. "The Effects of Health Insurance and Self-Insurance on Retirement Behavior," Computing in Economics and Finance 2001 24, Society for Computational Economics.
  2. James Marton & Stephen A. Woodbury, 2007. "Retiree Health Benefit Coverage and Retirement," Book chapters authored by Upjohn Institute researchers, in: Dimitri B. Papadimitriou (ed.), Government Spending on the Elderly, pages 222-242 W.E. Upjohn Institute for Employment Research.
  3. Gruber, Jonathan & Madrian, Brigitte C, 1995. "Health-Insurance Availability and the Retirement Decision," American Economic Review, American Economic Association, vol. 85(4), pages 938-48, September.
  4. James Marton & Stephen A. Woodbury, 2013. "Retiree Health Benefits as Deferred Compensation," Public Finance Review, SAGE Publishing, vol. 41(1), pages 64-91, January.
  5. Erin Strumpf, 2010. "Employer-sponsored health insurance for early retirees: impacts on retirement, health, and health care," International Journal of Health Economics and Management, Springer, vol. 10(2), pages 105-147, June.
  6. Alan L. Gustman & Thomas L. Steinmeier, 1993. "Employer Provided Health Insurance and Retirement Behavior," NBER Working Papers 4307, National Bureau of Economic Research, Inc.
  7. 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.
  8. Nyce, Steven & Schieber, Sylvester J. & Shoven, John B. & Slavov, Sita Nataraj & Wise, David A., 2013. "Does retiree health insurance encourage early retirement?," Journal of Public Economics, Elsevier, vol. 104(C), pages 40-51.
  9. Bridgitte C. Madrian, 1994. "The Effect of Health Insurance on Retirement," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 181-152.
  10. Robert L. Clark & Melinda Sandler Morrill, 2010. "Retiree Health Plans in the Public Sector," Books, Edward Elgar Publishing, number 13688.
  11. James Marton & Stephen A. Woodbury, 2006. "Retiree Health Benefits and Retirement," Upjohn Working Papers and Journal Articles 06-128, W.E. Upjohn Institute for Employment Research.
  12. Lynn A. Karoly & Jeannette A. Rogowski, 1994. "The Effect of Access to Post-Retirement Health Insurance on the Decision to Retire Early," ILR Review, Cornell University, ILR School, vol. 48(1), pages 103-123, October.
  13. Zvi Bodie & John B. Shoven & David A. Wise, 1987. "Introduction to "Issues in Pension Economics"," NBER Chapters, in: Issues in Pension Economics, pages 1-12 National Bureau of Economic Research, Inc.
  14. Zvi Bodie & John B. Shoven & David A. Wise, 1987. "Issues in Pension Economics," NBER Books, National Bureau of Economic Research, Inc, number bodi87-1, September.
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