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Health Insurance and Retirement:Discussion of Coe/Goda
Jay BhattacharyaOctober 2014
Health Insurance Options for Near-Elderly Pre-ACA
62 year old
Stay employed
Retire
Retiree health care
COBRA
Individual market
No health insurance
Employer provided group coverage
No employer coverage
Individual market
No health insurance
Health Insurance Options for Near-Elderly Pre-ACA (Community-Rated / Group Experience Rated)
62 year old
Stay employed
Retire
Retiree health care
COBRA (18 months post-retirement)
Individual market
No health insurance
Employer provided coverage
No employer coverage
Individual market
No health insurance
Health Insurance Options for Near-Elderly Pre-ACA, Reform States
62 year old
Stay employed
Retire
Retiree health care
COBRA (18 months post-retirement)
Individual market
No health insurance
Employer provided coverage
No employer coverage
Individual market
No health insurance
Some Observations on Community Rating Reform
• CR reform made the individual market more attractive to the near-elderly.– Subsidies (in expectation) from younger enrollees
in the same plan• Both employed and pre-65 y/o retirees
bought insurance from individual market
Some Observations on Community Rating Reform (II)
• On net, Coe/Goda find that CR reform increased retirement incentives– Does this conclusion hold for the ACA?
Health Insurance Options for Near-Elderly Post-2014 With ACA
62 year old
Stay employed
Retire
Retiree health care
COBRA (18 months post-retirement)
No health insurance
Employer provided group coverage
No employer coverage No health
insurance
Subsidized exchange insurance
Subsidized exchange insurance
Health Insurance Options for Near-Elderly Post-2014 With ACA (after employer response)
62 year old
Stay employed
Retire
Retiree health care
COBRA (18 months post-retirement)
No health insurance
Employer provided group coverage
No employer coverage
Subsidized exchange insurance
No health insurance
Subsidized exchange insurance
Source: Fronstin and Adams (2012)
Source: Fronstin and Adams (2012)
500,000 – 1,500,000
200,000 – 500,000
50,000 – 200,000
0 – 50,000
A) State and Local Government Employees
50,000 – 150,000
20,000 – 50,000
5,000 – 20,000
0 – 5,000
B) State and Local Government Retirees under Age 65 Years
45% – 50%
40% – 44%
35% – 39%
30% – 34%
20% – 29%
C) Employees and Retirees with Household Incomes between 138-400% of the Federal Poverty Line
State Shift only under-65 retirees
Shift employees eligible for subsidized insurance
California $1.8 billion $12.9 billion
Florida $1.2 billion $4.8 b – No Medicaid exp. $7.3 b – w/Medicaid exp.
New York $1.9 billion $9.4 billion
Illinois $120 million $2.9 billion
North Carolina $670 million $4.3 b – No Medicaid exp.$6.2 b – w/Medicaid exp.
Michigan $430 million $2.4 billion
National Total $18.6 billion $101 b – Medicaid (26 states)$139 b – Medicaid (all states)
State and Local Government Savings
Observations
• The ACA will push toward the de-linking of employment and insurance coverage.
• The effect of CR underestimates the effect of the ACA on retirement incentives.– CR is an implicit subsidy to the insured near-
elderly – The ACA includes CR as well as an explicit subsidy
that depends on income.
