Nadia Karamcheva, Congressional Budget Office* Retirement Research Consortium Meeting

1. Comments on“The Impact of Massachusetts Health Insurance Reform on Labor Mobility”by Norma B. Coe, Wenliang Hou, Alicia H. Munnell, Patrick J. Purcell, and Matthew S. Rutledge Nadia Karamcheva, Congressional Budget Office* Retirement Research Consortium Meeting August 2017, Washington DC *The views expressed in this presentation are the author’s and should not be interpreted as the views of the Congressional Budget Office.

2. Aim of the Study: to determine how MA health reform has affected job mobility and exits from employment • Policy relevance: Similarities between MA reform and the Patient Protection and Affordable Care Act (ACA) • Experience of workers in MA provides evidence for how ACA might affect labor markets

3. Policy Relevance • Historic decline in prime-age labor force participation • “Job lock” highly debated in public policy • Knowing the prevalence of “job lock” can help assess policies that weaken the link between employment and health insurance • Do policies remove an inefficient constraint on employment/retirement – what are the welfare effects? • Fiscal effects (changes in tax revenue from labor supply decreases)

4. How Might MA Health Reform Affect Labor Mobility? • Prime work-age individuals • Workers subject to “job lock” more likely to change employers; to switch to self-employment; to switch from large to small firms • Individuals near retirement • Potentially more affected – lower-priced/more available insurance alternatives could lead to increased employment exits or switches to bridge jobs

5. Is MA Health Reform Working Against Policies Aimed at Delaying Retirement? • Previous policies adopted to incentivize delayed retirement and counter increasing life expectancy. • Increases in Social Security full retirement age • End of Social Security earnings test after full retirement age • Increase in delayed retirement credit • End of mandatory retirement • Could MA health reform have affected those previous policies aimed at delaying retirement?

6. Older adults today are participating and working more than their counterparts 10 or 20 years ago Labor Force Participation Rates, MEN Source: Author’s calculations from the Current Population Survey.

7. Older adults today are participating and working more than their counterparts 10 or 20 years ago Labor Force Participation Rates, WOMEN Source: Author’s calculations from the Current Population Survey.

8. Older adults today are participating and working more than their counterparts 10 or 20 years ago Source: Richard Johnson and Nadia Karamcheva, “What Determines Gradual Retirement? Differences in the Path to Retirement Between Low- and High-educated Workers”, Presented at ASSA Annual Meeting, January 2017, Chicago IL. Note: Full-time workers Ages 51 to 75 in the 1992 to 2010 HRS.

9. Empirical Evidence on Health Insurance and Retirement • Employer-sponsored health insurance • Decreases probability of retirement • Retiree health insurance • Increases probability of retirement for some workers; but also increases probability of phased/partial retirement. Individuals with phased/partial retirement spells significantly delay their full exit from the labor force Source: Johnson, Richard and Nadia Karamcheva, “What Determines Gradual Retirement? Differences in the Path to Retirement Between Low- and High-educated Workers”, Presented at ASSA Annual Meeting, January 2017, Chicago IL. Note: Full-time workers Ages 51 to 75 in the 1992 to 2010 HRS. Next period probability of transitioning from full-time work to one of four states

10. Empirical Evidence on Health Insurance and Retirement Among workers ages 51 to 75 ¾ have health insurance through their employers > 1/3 have retiree health insurance through their employers Source: Richard Johnson and Nadia Karamcheva, “What Determines Gradual Retirement? Differences in the Path to Retirement Between Low- and High-educated Workers”, Presented at ASSA Annual Meeting, January 2017, Chicago IL. Note: Full-time workers Ages 51 to 75 in the 1992 to 2010 HRS.

11. Coe, Hou, Munnell, Purcell, and Rutledge (2016) • Uses high quality employer-employee administrative data for the years 2000-2006 (pre-) and 2007-2011 (post-reform) • Difference-in-difference estimation • Control states: Maine, New Hampshire, Rhode Island, Connecticut, and New York • Employment transitions measured annually • Identified by changes in EINs (employer identification number) • No information on individuals’ access to employer-provided health insurance

12. Empirical Results -> MA reform seems to be associated with reduced mobility and reduced exit from employment -> Results even stronger for the 55-64 age group • Employer changes • Lower in MA after reform • Transitions from large to small firm • Lower in MA after reform • Transitions from small to large firm • Insignificant results • Employment exits • Lower in MA after reform

13. Why No Effect or Effect Opposite to Theory? • Insurance through the MA Connector might • be a poor substitute for private employer-sponsored insurance • not be similar to retiree health insurance (usually part of a comprehensive compensation package, often in combination with a defined benefit plan • Reform coincides with the Great Recession • Is the difference-in-difference comparison valid? • Are trends over time the same?

14. Why No Effect or Effect Opposite to Theory?Are the New England States Valid Controls?

15. Critiques and Suggestions • Employer transitions and exits out of employment defined as changes in EINs and earnings>=4 quarters of coverage • Verify assumption that employer changes in EINs are similar across states? • Some employer-to-employer transitions might be due to layoffs (unemployment increased significantly over the period, more so in the control states) • Use quarters of coverage to identify voluntary vs involuntary transitions? Track individuals who did not experience unemployment • Analysis tracks annual transitions – for retirement-age individuals “permanent” retirement might be more informative • Better identify the intent-to-treat groups (info from the employer side – availability of health insurance?) • Most affected groups: Had employer health insurance while working, but not if left (e.g no coverage through spouse’s employment, no retiree health insurance)

16. Critiques and suggestions • Account for ongoing trend towards delayed retirement (is it similar across states?) • Triple difference – compare with the group 65+ which should not be affected • More sensitivity analyzes • Exclude later years (2010-2011) when economic conditions diverge between MA and control states • Examine results by earnings groups

17. Conclusion • Carefully done paper – thorough and well-written • Innovative use of administrative data • Continuous Work History Sample (CWHS) • Longitudinal Employee-Employer Data (LEED) • Needs more discussion on what could be behind the counterintuitive results • Looking forward to seeing more results for specific groups

18. Conclusion • We are at point in time of significant policy change • More changes are likely in the next few decades • Health Insurance reform • Changes to address the funding shortfall of the Old Age, Survivors and Disability Insurance program (OASDI) • More research is needed to inform the policy community about what changes to the health system might mean for the future