Association for Public Policy Analysis & Management

In implementing policies as complex as ACA, the effectiveness of the policies is dependent on the level of understanding the target beneficiaries have with respect to the policies. Given the complexity of the US healthcare financing system and individuals’ bounded rationality, it may be difficult to understand the full implications of the changes brought about by the ACA.

Drawing data from the Health and Retirement Study (HRS) from 2004 to 2016, I estimate the impact of ACA on workers’ retirement behaviors while taking into consideration their varying insurance literacy rates using a triple difference (DDD) design. The insurance literacy rates are measured based on the extent of individuals’ access to ACA assister programs, varying levels of education, cognitive abilities, and knowledge of insurance system and related terminologies. Covariates included in the model are other determinants of retirement and job-exits as well as demographics. In that ACA serves as an alternative source of post-retirement health benefits, I compare the retirement decisions of workers who had access to retirement health insurance (RHI) through employers prior to ACA with that of workers who did not have RHIs. Several robustness checks including propensity score matching will be performed.

Preliminary findings suggest that, compared to those who previously had RHIs before the introduction of the ACA, those who had no RHIs will be more profoundly influenced by the ACA and, consequently, plan on earlier retirements. Among those who had no RHIs before ACA, those with higher insurance literacy rates modify their retirement plans more readily in the direction predicted by the theory of job-lock than those with low literacy rates. In addition to further validating the job-lock removing effect of the ACA, the findings imply that changes in policies as complex as the insurance provision ought to be complemented by efforts to promote target population’s understanding of the changes.