Is the Affordable Care Act Affecting Retirement Yet?

Abstract

We analyze whether the Affordable Care Act (ACA) has affected labor supply of older Americans using data that span more than four years after the policy's implementation in 2014. We find no changes in labor supply of older Americans either in response to subsidized marketplace coverage, which became available nationally in 2014, or in response to the expansion of Medicaid eligibility in some states but not others. We analyze multiple dimensions of labor supply -labor force participation; employment; full-time work conditional on employment -as well as several measures of retirement including self-reported retirement and the receipt of retirement income. We fail to find labor supply effects even for subgroups with less than a high school education or those with fair or poor health, who might have been expected to have a greater labor supply response. The lack of a labor supply response stands in contrast to the large gains in coverage observed in 2014. These results suggest that for Americans approaching retirement the Affordable Care Act achieved its primary goal of increasing coverage without the unintended consequence of reducing labor supply.

Health Insurance Affordability Concerns and Health Care Avoidance Among US Adults Approaching Retirement

“…However, the current findings suggest that many older adults aged 50 to 64 years still worry about maintaining employer-sponsored insurance and keep a job for that reason, perhaps because of concerns about affordability of other health insurance options. Although other studies have found no change in labor force participation or early retirement related to ACA Marketplace or Medicaid expansion coverage, these findings suggest that the ACA may not have fully eliminated job lock for individuals aged 50 to 64 years who remain employed.…”

“…Prior studies of this age group have primarily focused on tracking the uninsured rate, which has decreased from 15% in 2010 to 6% in 2015 after implementation of the ACA's major coverage provisions, 12 and likely continued to decrease in later years. 14 One 2014 survey 15 conducted among all nonelderly adults found limited numeracy and literacy among many adults across socioeconomic strata and found that nearly one-half of individuals with these limitations had difficulty navigating the process of selecting a health insurance plan. Before passage of the ACA, McWilliams and colleagues 16 found increased health care utilization and costs after acquiring Medicare coverage at age 65 years among previously uninsured adults with a history of diabetes, hypertension, heart disease, or stroke, compared with adults with those conditions who were previously insured.…”

“…Since implementation of the ACA and its subsequent challenges, there has been limited research comprehensively examining the perceived challenges to navigating health insurance that adults aged 50 to 64 years face as they approach retirement and how those challenges might be associated with decisions about health care and employment. Prior studies of this age group have primarily focused on tracking the uninsured rate, which has decreased from 15% in 2010 to 6% in 2015 after implementation of the ACA’s major coverage provisions, and likely continued to decrease in later years . One 2014 survey conducted among all nonelderly adults found limited numeracy and literacy among many adults across socioeconomic strata and found that nearly one-half of individuals with these limitations had difficulty navigating the process of selecting a health insurance plan.…”