Is the ACA providing a gentle push toward retirement?

Researchers find “no evidence of an increase in retirement among individuals ages 55 to 64 in 2014 compared to 2013,” debunking what some consider is a myth, that the Patient Protection and Affordable Care Act (ACA) would act as an incentive for retirement. Even the 30 states that expanded their Medicaid programs, allowing more individuals access to health coverage, did not see a trend toward early retirement. The trend, or lack thereof, is noted by Helen Levy, along with Thomas Buchmueller and Sayeh Nikpay from the University of Michigan in a paper they presented recently at the Retirement Research Consortium in Washington, D.C.

The researchers reviewed data from the Current Population Survey (CPS), specifically analyzing the 36 percent of workers aged 55 to 64 noted in the data who would lose health coverage from employers if they retired. When analyzing data from 2013 and 2014, the fraction of individuals in this age range who are retired did not increase by more than a percentage point when calculating the margin of error.

In addition to looking at the 36 percent, researchers also looked at the probability of retirement by age group, meaning the probability of retirement as a function of single year of age, using the cross-sectional CPS data. Analysis of the probability data also revealed that the age-based retirement profiles in 2013 and 2014 were essentially the same as each other, whether or not the individuals lived in states with Medicaid expansion.

Although the researchers found no evidence of an increase in retirement at this time, they did note that “it may still be the case that over time, retirement patterns may shift in response to these significant new incentives.” Various factors may have caused concern among potential retirees before deciding to rely on ACA coverage in 2014. Obstacles to enrollment in health insurance exchanges during the first open enrollment period and the U.S. Supreme Court ruling in King v. Burwell regarding the constitutionality of the tax credits provided by the ACA were in question during that time. Researchers noted that, “with these barriers removed, the ACA’s reforms will become more firmly established and more familiar, and the availability of subsidized coverage that is not tied to employment may result in increases in early retirement over the next decade.”


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