Social Security Eligibility and Health Care Utilization: Evidence from Administrative Data

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by Matthew Knowles, Vanderbilt University

The choice of when to retire is one of the most important labor market decisions people make during their lives and, within the next 5 years, approximately 22 million Americans will reach the Social Security Early Eligibility Age (EEA) of 62. Yet the health care consequences of retirement remain only partly understood. On the one hand, retirement could reduce health care utilization by improving underlying health; retirement removes the physical and mental stresses of working a demanding job and allows additional time to be spent on healthy behaviors. On the other hand, retirement could lead to higher health care utilization; retirement has been associated with loss of a sense of purpose and some retirees fill the new time with increased consumption of alcohol and tobacco. Understanding how retirement affects health care expenditures is important for the SSA and health insurers attempting to forecast the utilization patterns of their enrollees as demographics and retirement policy shifts. This project will utilize a regression discontinuity approach in combination with administrative data on hospitalizations in New York, California, and North Carolina to study how retirement affects health care utilization in the United States.

Specifically, I will estimate how inpatient, emergency room, and ambulatory surgery hospitalizations and charges change as people approach and pass the EEA. Preliminary results indicate that turning 62 causes a discontinuous increase in retirement among males by 11 percentage points and an increase in all-case male inpatient hospitalizations by 1 percentage point.

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