The Affordable Care Act as Retiree Health Insurance: Implications for Retirement and Social Security Claiming

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Abstract

Using data from the Health and Retirement Study, we examine the effects of the Affordable Care Act (ACA) on retirement. We first calculate retirements (and in related analyses changes in expected ages of retirement and/or Social Security claiming) between 2010, before ACA, and 2014, after ACA, for those with health insurance at work but not in retirement. This group experienced the sharpest change in retirement incentives from ACA. We then compare retirement measures for those with health insurance at work but not in retirement with retirement measures for two other groups: those who, before ACA, had employer provided health insurance both at work and in retirement, and those who had no health insurance either at work or in retirement. To complete a difference-in-difference analysis, we make the same calculations for members of an older cohort over the same age span. We find no evidence that ACA increases the propensity to retire or changes the retirement expectations of those who, before ACA, had coverage when working, but not when retired. An analysis based on a structural retirement model suggests that eventually ACA will increase the probability of retirement by those who initially had health insurance on the job but did not have employer-provided retiree health insurance. But the retirement increase is quite small, only about half a percentage point at each year of age. The model also suggests that much of the effect of ACA on retirement will be realized within a few years of the change in the law.

Key Findings

  • Using data from the Health and Retirement Study, we find no evidence that for those with health insurance at work but not in retirement, the Affordable Care Act increased retirements over the period 2010 to 2014.
  • We also find no evidence that the Affordable Care Act changed retirement expectations or expected age of Social Security benefit claiming of those who, before ACA, had health insurance coverage when working, but not when retired.
  • An analysis based on a structural retirement model suggests that eventually ACA will increase the probability of retirement by those who initially had health insurance on the job but did not have employer-provided retiree health insurance by about half a percentage point at each year of age.
  • The structural retirement analysis also suggests that much of the effect of ACA on retirement will be realized within a few years of the change in the law.

Citation

Gustman, Alan L., Thomas Steinmeier, and Nahid Tabatabai. 2016. “The Affordable Care Act as Retiree Health Insurance: Implications for Retirement and Social Security Claiming.” Ann Arbor, MI. University of Michigan Retirement Research Center (MRRC) Working Paper, WP 2016-343. https://mrdrc.isr.umich.edu/publications/papers/pdf/wp343.pdf

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Paper ID

WP 2016-343

Publication Type

Working Paper

Publication Year

2016
pavement-enterprise