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Health Affairs, Vol 13, Issue 2, 246-254
Copyright © by Project HOPE

Journal Article

The cost of providing health care benefits to early retirees

Subsidized health care benefits would be guaranteed for early retirees ages fifty-five to sixty-four under President Bill Clinton's health care reform proposal. This is an important policy issue because persons in this age group are the least likely age cohort of the nonelderly population to be working. They are also the most likely to face high and uncertain health care costs. Previous research has shown that access to continuation of health insurance coverage encourages retirement before age sixty-five. These retirement effects can add substantially to the federal government's cost of providing health care benefits to early retirees. Based upon various assumptions for premium levels, the induced retirement effects of current workers, and the number of nonworkers qualifying for subsidized benefits, we present total annual cost estimates to the federal government, based on 1994 figures, ranging from $9.1 billion to $19.6 billion, to provide subsidized benefits to the nonworking population between the ages of fifty-five and sixty-four.

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