Has the availability of coverage under the Affordable Care Act spurred an increase in retirement by older workers? (Photo: Shutterstock)
If older workers have access to health care outside the workplace, do they choose to retire rather than keep working? Employers struggling to fill vacancies in a tight labor market might be wondering, concerned that the pool of older workers they have to draw on is shrinking. However, such does not appear to be the case.
A working paper from the Michigan Retirement and Disability Research Center at the University of Michigan looked at the figures to see whether the availability of coverage under the Affordable Care Act spurred an increase in retirement by older workers—and found, surprisingly, that the answer was in the negative.
Among the paper's key findings were a significant increase in coverage among Americans ages 50–64 after the ACA became effective in 2014, with the uninsured rate dropping from 16 percent in 2013 to 12 percent in 2014 and 10 percent in 2015 and 2016.
Previous studies had suggested the potential for a rise in retirement among older workers once they were able to obtain coverage through the ACA. As a result, many analysts expected that ACA implementation in 2014 would reduce the labor supply of older workers.
But that didn't happen.
In fact, says the paper, "We find no changes in labor supply of older Americans either in response to subsidized marketplace coverage, which became available nationally in 2014, or in response to the expansion of Medicaid eligibility in some states but not others. We fail to find labor supply effects even for subgroups with less than a high school education or those with fair or poor health, who might have been expected to have a greater labor supply response."
Considering the results of the earlier studies that projected a drop in the older labor force once coverage was available, researchers concluded that the "political uncertainty" surrounding the ACA and Medicaid expansion "discourage[s] older workers from counting on them when making career decisions."
Thus, no drop in the older workforce despite earlier indications to the contrary.
The paper concludes that "for Americans approaching retirement the Affordable Care Act achieved its primary goal of increasing coverage without the unintended consequence of reducing labor supply."
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
