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Retiree Health Insurance and Disengagement from a Career Job

Journal of Labor Research volume 31, pages 247–262 (2010)Cite this article

Abstract

Over the past two decades the prevalence of partial/phased retirements has increased dramatically, redefining retirement and the way in which retirement benefits are evaluated. Specifically the effect of retirement benefits on the transition away from a state of career employment has become the primary issue of interest. This study uses data obtained from the Health and Retirement Study (HRS) and the Rand HRS files, to examine the relationship between access to retiree health insurance (RHI) and the decision to leave one’s career job. We employ a Cox Proportional Hazard Model to estimate how RHI affects the probability that an individual disengages from their career job, given they have not yet done so. Results indicate that those with access to RHI are 21% more likely to leave their career employer in all time periods than similar individuals without RHI. Several robustness tests including stratified estimation and propensity score matching are performed and no evidence of bias is detected.

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Fig. 1

Notes

  1. All robustness tests and the PHA are discussed more thoroughly in “Model Diagnostics”.

  2. Rogowski and Karoly (2000) find that an increase in the premium cost borne by the retiree, relative to that paid as an active employee does not significantly alter the effect RHI has on the probability of retiring. Linsenmeier (2002) investigates the relationship between a person’s health and RHI and shows that the effect of RHI is not significantly different for a person in poor health than for a person in good health.

  3. The type of disengagement is derived from the labor force status variable constructed for the Rand HRS. In the Rand HRS individuals are classified as being: a full-time worker, a part-time worker, unemployed, partially retired, fully retired, disabled, or not in the labor force. In this context an individual is considered unemployed if they are no longer working for their employer from the previous wave but are looking for work elsewhere. Thus, individuals who have left their career employer in order to seek a bridge job would be included in this category. An individual is considered to be not in the labor force if they are no longer working but do not provide a rationale for their absence from the labor market.

  4. Respondents reporting very high values of years of tenure and hours of work per week were deleted from the sample. This included workers indicating more than 50 years of tenure (4 respondents) and more than 60 h of work per week (77 respondents).

  5. The HRS asks two questions about RHI availability: “Is this health insurance plan available to people who retire?” and “Does the organization have any health insurance plan available to retirees?” Neither question asks whether the respondent is or will be eligible for coverage by retiree health insurance. Thus, the variable in the analysis indicates whether the respondent is employed by a firm that makes health insurance available to some of its retirees. In general, eligibility requirements for these programs include a certain number of years of service. Given the sample selection criteria used in this study, it is likely that most if not all of the respondents working for companies that offer RHI will be eligible for this benefit.

  6. Other definitions for marital and health status are considered and the empirical findings are not significantly affected. These results are not presented in the paper but are available upon request.

  7. In empirical estimation alternative specifications including age variables, industry variables, and occupation variables were considered, and the empirical results were not affected.

  8. For a detailed discussion of the direct test see Cleves et al. (2008).

  9. For a nice introduction to propensity score matching techniques see Rosenbaum and Rubin (1983), Becker and Muendler (2008) and Mocan and Tekin (2006). For an application of this technique applied to hazard models see Doyle (2009).

  10. We also considered a fixed-effect hazard model; however, such techniques are not yet well developed in the literature and so we opt for the more straightforward approach of estimation based on propensity score matching.

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Authors and Affiliations

  1. Department of Economics, Missouri State University, 901 South National Avenue, Springfield, MO, 65897, USA

    Christina Robinson

  2. Department of Economics, North Carolina State University, Nelson Hall, 2308, Box 7229, Raleigh, NC, USA

    Robert Clark

  3. Department of Management, Innovation and Entrepreneurship, North Carolina State University, Nelson Hall, 2308, Box 7229, Raleigh, NC, USA

    Robert Clark

Authors
  1. Christina Robinson
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  2. Robert Clark
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Correspondence to Christina Robinson.

Additional information

We thank Melinda Sandler Morrill, Alvin Headen, Walter Wessels, and Xiaoyong Zheng, for their helpful comments and suggestions. We are also grateful to the Center for State and Local Government Excellence for their generous funding of the “Project on State and Local Government Healthcare Benefits”, which made this research possible.

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Robinson, C., Clark, R. Retiree Health Insurance and Disengagement from a Career Job. J Labor Res 31, 247–262 (2010). https://doi.org/10.1007/s12122-010-9091-4

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Keywords

  • Retiree health insurance
  • Retirement