Author: Rust, John ; Buchinsky, Moshe ; Benitez-Silva, Hugo; Boz, Emine; Nichols, Joseph; Roy, Sharbani; Tristao, Ignez
Working Paper : Health Status, Insurance, and
Expenditures in the Transition from Work to Retirement (PDF); July 2005
Research Description:
This paper analyzes the dynamics of health insurance coverage, health expenditures,
and health status in the decade expanding from 1992 to 2002, for a cohort of older
Americans. We follow 13,594 individuals interviewed in Waves 1 to 6 of the Health and
Retirement Study, most of whom were born between 1930 and 1940, as they transition
from work into retirement. Although this “depression cohort” is by and large fairly well
prepared for retirement in terms of pension coverage and savings, we identify significant
gaps in their health insurance coverage, especially among the most disadvantaged
members of this cohort. We find that government health insurance programs—
particularly Medicare and Medicaid—significantly reduce the number of individuals who
are uninsured and the risks of large out of pocket health care costs. However, prior to
retirement large numbers of these respondents were uninsured, nearly 18% at the first
survey in 1992. Moreover, a much larger share, about 55% of this cohort, are transitorily
uninsured, that is, they experience one or more spells, lasting from several months to
several years, without health insurance coverage. We also identify a much smaller group
of persistently uninsured individuals, and show that this group has significantly less
wealth, and higher rates of poverty, unemployment, and health problems, disability, and
higher mortality rates than the rest of the members of the cohort under study. We
provide evidence that lack of health insurance coverage is correlated with reduced
utilization of health care services; for example, respondents with no health insurance
visit the doctor one fourth as often as those with private insurance and are also more
likely to report declines in health status. We also analyze the components of out of
pocket health care costs, and show that prescription drug costs constituted a rapidly
rising share of the overall cost of health care during the period of analysis.
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