Panel Paper: Public Health Insurance, Health Status, and Retirement Decisions

Thursday, November 8, 2018
Wilson B - Mezz Level (Marriott Wardman Park)

*Names in bold indicate Presenter

Marguerite Burns, University of Wisconsin, Madison and Laura Dague, Texas A&M University

Work status, wages, and early Social Security claiming are important determinants of financial security during retirement. In the last two decades, many states have expanded their Medicaid programs to reach adults at higher income levels and eliminated categorical eligibility requirements such as disability or responsibility for a dependent child. The availability of publicly subsidized health insurance for non-elderly adults may disincentivize work and affect retirement-related decisions among older Americans, particularly those in poor health who may value the health benefits highly. In this study, we use a difference-in-differences empirical design to estimate the effect of state Medicaid expansions from 1996 to 2014 on retirement decisions and Social Security income among adults ages 50 to 64. We combine a restricted version of the Medical Expenditure Panel Survey (MEPS) with data that we collected on state expansions of Medicaid for non-elderly, non-disabled adults from 1996 to 2014 to inform our estimates. We also characterize the health and disability subpopulations in which public health insurance expansions have the largest effect. The long-run financial health of publicly funded retirement benefits like Social Security depends critically on decisions about when and how people retire, and evidence from this study can help inform such crucial policy projections.