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The implications of declining retiree health insurance

Series Title(s):
Center for Retirement Research working paper
Contributor(s):
Monk, Courtney.
Munnell, Alicia H.
Center for Retirement Research at Boston College.
Publication:
Chestnut Hill, MA : Center for Retirement Research at Boston College, c2009
Language(s):
English
Format:
Text
Subject(s):
Health Benefit Plans, Employee -- trends
Insurance Coverage -- trends
Insurance, Health -- trends
Retirement -- statistics & numerical data
Age Factors
Choice Behavior
Eligibility Determination
Employment
Financing, Personal
Forecasting
Health Benefit Plans, Employee -- economics
Health Benefit Plans, Employee -- statistics & numerical data
Health Surveys
Insurance Benefits
Insurance Coverage -- economics
Insurance Coverage -- statistics & numerical data
Insurance, Health -- economics
Insurance, Health -- statistics & numerical data
Medicaid
Medically Uninsured
Middle Aged
Humans
United States
Genre(s):
Technical Report
Abstract:
A large number of retirees have employer-sponsored retiree health insurance (RHI). While RHI is a common source of supplemental coverage for Medicare beneficiaries, it is also the only affordable source of health insurance for many retirees under age 65 who have no access to Medicare. However, employers are scaling back their RHI benefits in response to rising health costs and changes in accounting rules, by either eliminating benefits which shifts costs to retirees, or tightening vesting requirements. Using data from the Health and Retirement Study, this paper examines the potential consequences of eliminating RHI for both pre-Medicare and Medicare-eligible retirees. For younger retirees the likely primary response is to work longer, and we find that number of workers age 55 to 64 would increase by 7 percent, as some of those who have their access to RHI eliminated would work rather than retire. Of those who still choose to retire, most lack any employer-sponsored health insurance option and would need to find an alternative source of coverage or go uninsured. For Medicare beneficiaries over 65, we estimate that about three quarters would replace RHI with another form of supplemental coverage. This shift would slightly reduce total spending and utilization for individuals who choose basic Medicare or a Medicare HMO as opposed to a Medigap plan, but health outcomes would probably be unaffected no matter which supplemental option is chosen. In short, a full elimination of RHI would primarily impact early retirees who must face the cost of much more expensive insurance or of financing illness without insurance. Policymakers may want to consider encouraging insurers to step in to provide more affordable plans for these early pre-Medicare retirees.
Copyright:
Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY license. (More information)
Extent:
36 p.
Illustrations:
Illustrations
NLM Unique ID:
101513602 (See catalog record)
Series Title(s):
Center for Retirement Research working paper
Contributor(s):
Monk, Courtney.
Munnell, Alicia H.
Center for Retirement Research at Boston College.
Publication:
Chestnut Hill, MA : Center for Retirement Research at Boston College, c2009
Language(s):
English
Format:
Text
Subject(s):
Health Benefit Plans, Employee -- trends
Insurance Coverage -- trends
Insurance, Health -- trends
Retirement -- statistics & numerical data
Age Factors
Choice Behavior
Eligibility Determination
Employment
Financing, Personal
Forecasting
Health Benefit Plans, Employee -- economics
Health Benefit Plans, Employee -- statistics & numerical data
Health Surveys
Insurance Benefits
Insurance Coverage -- economics
Insurance Coverage -- statistics & numerical data
Insurance, Health -- economics
Insurance, Health -- statistics & numerical data
Medicaid
Medically Uninsured
Middle Aged
Humans
United States
Genre(s):
Technical Report
Abstract:
A large number of retirees have employer-sponsored retiree health insurance (RHI). While RHI is a common source of supplemental coverage for Medicare beneficiaries, it is also the only affordable source of health insurance for many retirees under age 65 who have no access to Medicare. However, employers are scaling back their RHI benefits in response to rising health costs and changes in accounting rules, by either eliminating benefits which shifts costs to retirees, or tightening vesting requirements. Using data from the Health and Retirement Study, this paper examines the potential consequences of eliminating RHI for both pre-Medicare and Medicare-eligible retirees. For younger retirees the likely primary response is to work longer, and we find that number of workers age 55 to 64 would increase by 7 percent, as some of those who have their access to RHI eliminated would work rather than retire. Of those who still choose to retire, most lack any employer-sponsored health insurance option and would need to find an alternative source of coverage or go uninsured. For Medicare beneficiaries over 65, we estimate that about three quarters would replace RHI with another form of supplemental coverage. This shift would slightly reduce total spending and utilization for individuals who choose basic Medicare or a Medicare HMO as opposed to a Medigap plan, but health outcomes would probably be unaffected no matter which supplemental option is chosen. In short, a full elimination of RHI would primarily impact early retirees who must face the cost of much more expensive insurance or of financing illness without insurance. Policymakers may want to consider encouraging insurers to step in to provide more affordable plans for these early pre-Medicare retirees.
Copyright:
Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY license. (More information)
Extent:
36 p.
Illustrations:
Illustrations
NLM Unique ID:
101513602 (See catalog record)