The Effect of Health Reform on Retirement

Published: 2015


Many studies have shown that the availability of health insurance is an important determinant of the retirement decision. Beginning in January 2014, the Affordable Care Act (ACA) made affordable alternatives to employer-sponsored health insurance much more widely available than they had been previously through the establishment of health insurance exchanges and, in some states, the expansion of Medicaid eligibility to low-income, childless adults. We analyze whether these new health insurance options led to an increase in retirement or part-time work among individuals ages 55 through 64 during the first 18 months after the policy took effect. Using data from the basic monthly Current Population Survey from January 2005 through June 2015, we find that there was no increase in retirement in 2014 either overall or in Medicare expansion states relative to nonexpansion states. We also find no change in the fraction of older workers who are working part-time.

Key Findings

    • We find no evidence of an increase in retirement or a shift to part-time work among older workers during the first 18 months in which the Affordable Care Act’s new alternatives to employer-sponsored coverage were widely available.
    • It may still be the case that over time, retirement patterns will shift in response to the significant new incentives embodied in these programs.
    • Several factors may have led prospective retirees to exercise caution in relying on ACA coverage in 2014. First, there were well-publicized obstacles to enrollment in health insurance exchanges in the first open enrollment period in late 2013 and early 2014. Second, prospective retirees may have been prudently waiting to see whether the ACA reforms survived significant legal challenges that were not resolved until a U.S. Supreme Court ruling (King v. Burwell) in June 2015.
    • As the ACA’s reforms become more firmly established and more familiar, the availability of subsidized coverage that is not tied to employment may still lead to in increases in early retirement or shifts to part-time work among older workers in the near future.


Levy, Helen, Thomas Buchmueller, and Sayeh Nikpay. 2015. "The Effect of Health Reform on Retirement." Ann Arbor, MI. University of Michigan Retirement Research Center (MRRC) Working Paper, WP 2015-329.