Health Insurance Costs and Early Retirement Decisions

Richard W. Johnson, Amy J. Davidoff and Kevin Perese

ILR Review, 2003, vol. 56, issue 4, 716-729

Abstract: The loss of health insurance may be an important component of the cost of retirement, especially for workers without retiree health insurance coverage. The authors find that insurance costs significantly reduce retirement rates for full-time wage and salary workers ages 51 to 61. Simulations suggest that a $1,000 increase in the net present value of health insurance premium costs reduces the probability of early retirement by 0.17 percentage points for men and by 0.24 percentage points for women, corresponding to elasticities of −0.22 and −0.24, respectively. The authors' models predict that expanding the Medicare program to cover those aged 62–64 would increase retirement rates for workers with employer-sponsored coverage who lack retiree benefits, if the government subsidizes their coverage. However, the impact would be small, increasing overall retirement rates by only 7%.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ilrrev:v:56:y:2003:i:4:p:716-729

DOI: 10.1177/001979390305600410

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