Abstract
Using a multivariate framework, we analyze trends in employer provision of retiree health insurance (RHI), eligibility for new retirees, and retiree contributions. Data come for the Medical Expenditure Panel Survey—Insurance Component (MEPS-IC). While RHI provision to existing retirees decreased, eligibility for new retirees declined even more. Contribution requirements increased between 2000 and 2006 for retirees not yet eligible for Medicare (less than 65 years of age), but remained stable for those who were eligible (65 years of age or older). These results suggest growing financial instability for retirees.
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Notes
Despite its name, the insurance component of MEPS is actually an annual cross-sectional survey of establishments that are newly sampled each year.
Although the MEPS-IC was initially fielded in 1996, frequent changes in the RHI-related questions questionnaire affect the comparability of data over time. We therefore focus on the time period between 2000 and 2006, a period in which the questions remained stable.
In addition, this question was asked at the establishment level in 1997 and at the firm level in 1998. An establishment is a single physical location, while a firm (or company or enterprise) is comprised of all the establishments that operate under common ownership or control.
Although the information in the MEPS-IC is generally quite comprehensive, there are occasional cases where particular observations have missing data. In particular, we use the Census Bureau’s Longitudinal Business Database (LBD) to fill in firm age and industry.
Low wage is defined as less than $9.50 per hour in 2001-2003, less than $10.00 in 2004 and 2005, and less than $10.50 per hour in 2006.
While we see fewer older workers in businesses offering RHI from 2000 to 2006, we are concerned about the potential influence of the wording on the MEPS-IC questionnaire, which since 1998 has asked whether businesses “provide” RHI as a screener question for further data collection on RHI enrollment, eligibility, and contribution requirements. Conceivably, respondents interpret the term “provision” to mean that the business both offers RHI benefits, and that at least some workers take up this benefit. If this is how the question is interpreted, then businesses that provide RHI represent a subset of businesses that offer RHI. Zawacki (2006) reports some prima facie evidence for this claim, illustrating a sharp decline in the share of MEPS-IC establishments reporting RHI benefits between 1997 and 1998, the interval during which the questionnaire switched from screening based on eligibility to screening based on provision. Although we restrict our analysis to the post 2000 period, we are concerned about the phrasing of these questions because an even greater downward trend in offers might be masked if there is a simultaneous increase in the probability of taking up the benefit conditional on an offer (as would be the case, for example, if the share of retirees in the population is growing over time).
Both for early-retirees and Medicare-eligible retirees, we observe a decline in retiree contribution shares between 2000 and 2001. This decline could be related to a minor change in the wording of the questions between 2000 and 2001. Specifically, after 2001, the MEPS-IC question explicitly excluded COBRA coverage as a form of retiree health insurance.
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Acknowledgments
Any views, findings, or opinions expressed in this paper are those of the authors and do not necessarily reflect those of the U.S. Census Bureau. This work is unofficial and thus has not undergone the review accorded official Census Bureau publications. The authors thank Carole Roan Gresenz and M. Susan Marquis for invaluable guidance in developing this project, and Randy Becker for numerous insightful comments on a preliminary draft. We also thank Arnold Reznek, Anurag Singal, and Ann Schatzer for support at the Census Bureau’s Research Data Center. This research was funded by the U.S. Department of Labor.
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Zawacki, A.M., Eibner, C. & Zimmerman, E.M. Older Workers’ Access to Employer-Sponsored Retiree Health Insurance, 2000–2006. J Labor Res 30, 350–364 (2009). https://doi.org/10.1007/s12122-009-9070-9
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DOI: https://doi.org/10.1007/s12122-009-9070-9