The Effects of Health Insurance and Self-Insurance on Retirement Behavior

TitleThe Effects of Health Insurance and Self-Insurance on Retirement Behavior
Publication TypeReport
Year of Publication2004
AuthorsFrench, E, Jones, JBailey
Series TitleCenter for Retirement Research at Boston College Working Papers
Document Number2004-12
InstitutionCenter for Retirement Research at Boston College
Call Numberwp_2004/French-Jones2004-12.pdf
KeywordsMedicare/Medicaid/Health Insurance, Retirement Planning and Satisfaction

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 individual s 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.

Endnote Keywords

Health Insurance Coverage/Retirement Behavior

Endnote ID


Citation Key5592