The Affordable Care Act and Retirement: Effects of Changes in Medicaid and Non-Group Coverage

Because of the strong link between health insurance and employment status, access to a public or private health insurance plan is likely to be an important factor in making the decision to retire early. The higher-than-average health risks of the individuals most likely to retire early, 55 to 64 year olds, suggest that they will be particularly sensitive to health insurance availability when making employment decisions. In this study I estimate the effect of two different ACA provisions that expanded access to health insurance – Medicaid expansions and reforms to private, individual insurance markets – on retirement and labor force participation decisions of 55 to 64 year old men and women. I use data from the 2011 to 2017 Current Population Surveys and identify the ACA effects in a difference-in-difference framework using variation in state policy before and after January 2014. My very preliminary results suggest that Medicaid expansion is associated with an increase in the probability of early retirement, but that the effect may have been confined to the first three years following the expansion. There is also preliminary, suggestive evidence reforms to non-group insurance markets affected retirement decisions.