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The Decline in Employer-Sponsored Health Insurance for Retirees

Its Impact on Older Americans

NRSA Trainees Research Conference Slide Presentation (Text Version)

By Erin Strumpf

On June 24, 2006, Erin Strumpf made a slide presentation on the decline in employer-sponsored health insurance for retirees and its impact on older Americans at the 12th Annual National Research Service Award (NRSA) Trainees Research Conference. This is the text version of the slide presentation. Select to access the PowerPoint® slides (50 KB).

Slide 1

The Decline in Employer-Sponsored Health Insurance for Retirees and Its Impact on Older Americans

Erin Strumpf
Harvard University
strumpf@fas.harvard.edu
June 24, 2006

Funding from the National Institute on Aging, Grant Number T32-AG00186, is gratefully acknowledged.

Slide 2

A Major Shift In Retiree Benefits

Employer-sponsored health insurance is an important source of coverage for older Americans.
Rates of employer offer of retiree health insurance (RHI) have declined from 66% of large firms in 1988 to 33% in 2005.
We can expect future cohorts of retirees will have much lower rates of RHI coverage.
What are the implications for labor force participation, risk protection and health?

Slide 3

Empirical Strategy

Health and Retirement Survey, 1992-2002.
Panel of respondents aged 47-64 who report having employer-sponsored health insurance in 1992 (N = 6,889).
Compare outcomes for those with and without an RHI offer (1994-2002).
Use health shocks to compare the effect of RHI offer for those in poor health.

Slide 4

Identifying Assumptions

Effect of retiree health insurance offer:
- Given employer-sponsored coverage, those with and without an RHI offer are similar at baseline.
Differential effects by health status:
- Given baseline health status, health shocks are exogenous.

Slide 5

Full-Time Retirement Before Age 65

Retirement _it = a + ß1 RHIoffer _i1 + ß2 HealthShock _it + ß3 RHIoffer _i1*HealthShock_it + X_it + Year_t + e.
Covariates include:

Respondent's and spouse's demographics and health.
Household income and assets.
Pension information, industry and occupation.

Slide 6

Estimated Effect of RHI Offer on Full-Time Retirement

Condition	OLS	Percent Change
RHI Offer	0.0721**	35%
RHI Offer	[0.0099]	35%
Acute Health Shock	0.0979*	49%
Acute Health Shock	[0.0375]	49%
Acute* Offer	-0.0048	-2%
Acute* Offer	[0.0492]	-2%
R squared	0.1446
N	13,386

* significant at 1%, ** 0.1%
Standard errors are adjusted for the complex survey design and clustered at the individual level.

Slide 7

Other Results

RHI offer decreases out-of-pocket spending by 6%, or $275, on average in the top 40% of the spending distribution.
Among retirees, RHI decreases out-of-pocket spending by 21%, or $1,300.
RHI offer has no significant effects on insurance coverage.
Suggestive results that RHI offer increases outpatient medical care utilization.
No evidence of an effect of RHI offer on health.

Slide 8

Policy Implications

The current decline in RHI offer rates is likely to impact future cohorts of retirees.
- Decrease early retirement rates.
- Decrease protection from high out-of-pocket medical costs.
Policymakers and researchers should start now to examine the efficiency and effectiveness of different sources of health insurance coverage for the near-elderly population.

Current as of July 2006

Internet Citation:

The Decline in Employer-Sponsored Health Insurance for Retirees and Its Impact on Older Americans. Text Version of a Slide Presentation. Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/fund/training/strumpftxt.htm