ingly, due largely to the availability of government programs that cover 97 percent of those 65 and older, 99 percent of these individuals are covered by some type of insurance. Private insurance coverage declines as workers age: 80 percent for individuals 45 to 54, 76 percent for those 55 to 64, 61 percent for those 65 and older (for whom private insurance is generally a supplement to government programs). Employment-based coverage similarly declines over time: 75 percent for those 45 to 54, 68 percent for those 55 to 64, 34 percent for those 65 and older. The critical observation from the standpoint of the health and safety of older workers is that close to one-third of workers over 55 do not have health insurance provided by their employers. As chronic health conditions increase with age, the lack of health insurance (and the accompanying barriers to access to health care) may significantly impact the ability of these workers to remain in the workforce.
There is considerable evidence that health insurance coverage before and after retirement has an important influence on individual retirement decisions. Gustman and Steinmeier (1994) found, for example, that the effects of insurance plans are similar in nature to those of employer-sponsored pension plans. If workers can become eligible for retiree health benefits only after a delay, the availability of the plan tends to delay workers’ retirements until they gain eligibility. After eligibility has been achieved, the availability of retiree health benefits encourages earlier retirement than would occur if no benefits were offered. Quinn estimates that men and women in career jobs in 1992 were 8 to 10 percentage points less likely to leave their jobs over the next four years if they would lose health insurance coverage by doing so (Quinn, 1999). Inferring the overall effect of health insurance incentives on retirement patterns is not straightforward, however. A number of components of employee compensation, including wage rates, pension coverage, health insurance, and retiree health benefits, tend to be highly correlated with one another. This makes it difficult to distinguish statistically between the separate effects of each component of compensation. Nonetheless, the rising importance of health insurance coverage to older Americans suggests that the evolution of the public and private health insurance system may have had a sizable impact on retirement patterns.