Do State Non-Group Health Market Regulations Affect Early Retirement?

For workers, in the 50- to 64-year old age group, whose health care expenditure tends to grow rapidly, post-retirement health insurance availability is an important consideration in their decision on whether to retire before they are eligible for Medicare at age 65. State governments in the early 1990s and the Federal Health Insurance Portability and Accountability Act (HIPAA) of 1996 made efforts to provide early retirees more accessible and affordable post-retirement health insurance by regulating the non-group market. Treating the regulations as a quasi-experiment, I estimate the impact of these regulations on the retirement choice by difference-in-difference regressions. My results provide evidence that prohibiting insurance companies from rejecting applicants significantly increased the retirement rate by 1.4 percentage points. Designating state risk pool or other existing health plans to issue plans within a premium range also significantly increases retirement rate by 1.7 percentage points. Workers who have chronic health problems are more likely to retire in response to both types of regulations than those who do not have health problems. I also find that younger individuals (between age 50 to 59) are two to three percentage points more likely to respond to the above two regulations compared with more senior citizens (between age 60 to 63). The regulations which restrict insurers from charging beyond a range have no significant effect on the retirement decision in the population of age 50 to 63, regardless of whether or not the insurers are allowed to reject the applicants.