The effects of health insurance and self-insurance on retirement behavior

The effects of health insurance and self-insurance on retirement behavior

The

effects of health insurance and self-insurance on retirement behavior

French

Eric

French, Eric

Author

Author

Jones

John Bailey

Jones, John Bailey

Author

Author

text

working paper

Chestnut Hill, Mass. Center for Retirement Research at Boston College20042004monographic

Chestnut Hill, Mass.

Chestnut Hill, Mass.

Center for Retirement Research at Boston College

2004

2004

monographic

Englisheng

English

eng

electronicapplication/pdfborn digital

electronic

application/pdf

born digital

Using the first estimable dynamic programming model of retirement behavior that accounts for both savings and uncertain medical expenses, we assess the importance of employer-provided health insurance and Medicare in determining retirement behavior. Including both of these features allows us to determine whether workers value employer-provided health insurance because the subsidy contained in the insurance lowers their average medical expenses, or because health insurance also reduces their medical expense risk. Using data from the Health and Retirement Study, we find that the reduction in expected medical expenses explains about 60% of a typical individuals valuation of health insurance, with the reduction in volatility explaining the remaining 40%. We find that for workers whose insurance is tied to their job, shifting the Medicare eligibility age to 67 will significantly delay retirement. However, we find that the plan to shift the Social Security normal retirement age to 67 will cause an even larger delay.

Eric French and John Bailey Jones.

CRR WP2004-12

CRR WP2004-12

CRR WP

2004-12

http://crr.bc.edu/images/stories/Working_Papers/wp_2004-12.pdf

MChBEnglisheng

MChB

Englisheng

English

eng