Table 1 but individuals be less. Others indemnity Moreover, argue aged plans that 65there and are deteriorating expensive over appear(1.2 to percent}. be and health Table Tabl gender Table eprepaid 2 5among 3 Among differences plans this themay population nea inrbe both elderly, unacceptable, labor has12 had for .9 cea or copayments. It Mr. Work is Chairman, difficult status,Another to marital Igeneralize am35 pleased status, percent about and toofappear employers tt'ds family age before income cohort: surveyed youare it this contains among stated morning the many that tothey healthy discuss T-93 percent in the 25 to 44 age group. The near elderly's high rate of individual Summary SoMaj urces or of AcHealth tivity of Insurance Individuals Coverage Aged by 55-6 A 4ge, , 199 1992 2 Distribution of the Near Elderly by Work Status and Family Income Primary Sources of Health Insurance Coverage for the Near Elderly by Work Status a small individuals planned participation unavailable. the percent health but lacked tosignificant and rnake interested and Individual economic cove changes income. rage effect in in policies wo cha in These on 1992 r rking acteristics their the (table factors unde lower r for etirr ee many 3). of may traditional labor health the years also fo near rbenefits ce be to elderly health participation come, important byplans (those as 1995. well in may rates. aged as cost 55 to characteristics associated with sources of health insurance coverage for the coverage is a result of their weak attachment to the labor force and their Employee Benefit Rese_ch Institute Analysis of the March 1993 CPS individuals 64). Although between determining I am $3,600 Bill mortality @o seeking the Custe topresence r $6,000 , rates sufficient director annually, at and each of income source rage esearch while of have to health family reti for improved re. theinsu policies It Employee r includes ance with may cove medical Benefit individuals cost rage asResea at advances, much a r time who ch as near elderly. For example, 71.8 percent of the near elderly who were married increased likelihood of being disabled. They are less likely to have • Many people find the period between age 55 and 64 to be one of transition. Health Benefits and Retirement Family Income Workers Non-workers Among the near elderly reporting family income below $30,000, 21.7 Source of Total Aged Activity Employer Employer Other Percent Millions of life in which the need for health care may be increased. $12,000, are particularly forcedannually. toin withdraw recent These decades, from policies the researchers labor may force not disagree be due available to poo about r without health, how this and medical Institute reported (EBRI). having employment-based EBRI, a nonprofit, nonpa coverage rtisan in public 1992, while policy only research 44.2 percent employment-based under $5 thou health 167,125 coverage, 1% yet they are 656,854 more likely to need 8 % some Marriages may end through divorce or death, health problems may arise Health Insurance 18 and Over 18-24 25-44 45-54 55-64 65+ Direct S}x}use Private Medicare Champus Medicaid Uninsured percent had no health insurance coverage in 1992, compared with only 5.9 $5 to $10 thou 431,967 3'/, 1,162,588 14% organization, individuals of underwriting improvement the To tanear I elderly who (i.e., strives willlack the affect unmarried to health applicant cont futu ribute rinsurance e reported demand undergoes to 100.0 (millions) thecoverage having for % formulation a medical physical such because cove ca before ofre reffective age. 2their 1. and 2 theindividuals' In connection policy addition, and is to form of health insurance than other age cohorts. 2 which challenge a person's ability or desire to remain in the workforce, or Providing health care benefits for early retirees is an important policy $10 to $20 thou 1,533,447 12'/, 1,940,044 24% The Demographics of 55 to 64 Year Olds Total 18.._ 24.0 81.1 28.4 21.2 30.9 percent of those reporting family income of $30,000 or more. An even higher Worked written). 7,936,482 1,919,903 1,465,858 83,746 233,943 54,119 1,514,625 employment-based 42.8 responsible ability percent to participate health, of the near welfare, coverage in the elderly work and is lost with reti force. rdue ement family One to death, income policies. hypothesis divorce, below Consistent posits $30,000 or reti that, rement with reported while ourof a $20 to $30 thou 1,988,572 15'/`_ 1,356,311 17% retirement Worked programs may offer inducements 62.2% to retire before 13.2 eligibility for issue Total because Private individuals 134.() within this 14.4age group 59.8 are already 22,6 least 16.4 likely to 20.9 be Non-Working 1,656,044 2,108,380 1,058,949 1,103,117 245,370 644,055 1,214,716 percentage of those aged 18-44 and 45-54 with family income below $30,000 With $30 to the $40 exception thou 1,953of ,121 the elderly 15'/`, the near elderly 965,935are the most 12% likely age charter, having advances spouse. employment-based wein do medical not lobby science or coverage, advocate decrease positions. whereas mortality the rates, percentage they maywas not reduce employer 108.2 10.4 54.0 20.1 13.6 10.1 public programs such as Social Security and Medicare. These events may working The most and obvious most likely difference to face between uncertain 55health to 64 year care olds expenditures and other when age $40 to $50 thou 1,623,021 12'/, 687,550 8% As Did many Not direct Woas rk 40 percent76.1 of those 4.9 near 37.8elderly 39.8 who are 14.4retired 8.0 may 9.6 have 7.3 (35.0 percent and 31.5 percent, respectively) reported lack of coverage, group to have publicly provided health insurance coverage. Over 17 percent Percentage within Coverage category substantially population mo highe rbidity. r--80.7 Although percent--for more people those with might family be rescued income from of $30,000 what $50 to $60 thou 1,404,694 11% 447,122 5% both be a result of, and result in, changes in an individual's health and Illind or ir Disabled ect 32.1 5.5 9.1 14.1 5.6 1.9 4.0 2.8 groups compared is in with labor other forceage participation. groups within Asthe table nonelderly 1 indicates, population. almost 386 percent The Worked 83% 48% 58% 7c/, 49% 8% 55% coverage from a former employer, or continuation coverage under COBRA. compared Many The ages people with between 10.8 find percent the 55 and period and 64 is between 6.3 the percent, period age respectively, in 55 which and 64 many to of be those people one ofwith transition. transition family had $60 some to $70 form thouof public 1,009,627 coverage,8% compared with269,901 10.0 percent for 3% the or more (table 3). would Retired previously have been a fatal bout 14.5 of illness, more of 3.1 the population other private 25.8 4.0 5.8 2.5 2.7 10.8 Non-Working health insurance 17% cover52 age. '_ They 429' may also93increase '_, 51 the '7,_ portion 92% of income 45% of the near elderly did not work at all in 1992. That compares with less than near elderly population is a relatively high-risk population that generally more than $7(1 2,911,776 22% 683,483 8% income of $30,000 or more (table 4). Coverage Public under COBRA 47.5 requires that 3.3 the individual 7.9 pay 2.8 up to 102 3.7 percent29.8 of Marriages out of theirmay career end jobs, through and often divorceout orofdeath, the labo health r force. problems This transition may arise may that population Taking aged Care 45 of Home to 54 or and Family 9.8 pe State rcent 12.2 ment for the population 2.6 aged 25 to 44. The could be left disabled. Some of these individuals who have been rescued may 0 Total _ 13,0 _ 23,350 _0_0100% _0_ 8,169,788 100% that is devoted to health expenditures. does 20 percent not Medica qualify of re those foraged Medicare 46 33.6to 55 benefits; who 0.2 reported furthermore, 1.3that they privately 0.7 did notpuwork r1.7 chasedin 1992. 29.7 Going to School 0.02 0.04 _ _ _ ..... Percentage within Work Status category challenge the premium a person's for continuation ability or desi of rcoverage e to remain under in the a former work force, employer's or health be due Individuals to poor between health, inability the ages toofmeet 55 and the 64 physical who were demands workingof the werejob, more or major source of public insurance for the near elderly is Medicare. Individuals Source: EBRI tabulations of the March, 1993 supplement to the Current Population Survey be responsible Medicaid for growing 14.1numbers 2.7of the near 5.9 elderly 1.3 who are 1. not 2 2.9 Could Not Find Work 1.5 0.3 Worked 60% 15'X 11% 1 '_ 2% 0% 11 _ff: Nine health percent, insurance or can just be under a costly 2 million cornmodity individuals for this between group. the Theages availability of 55 andof Although individuals between tile ages of 55 and 64 are more likely to be retirement preference plan, but because for programs retirement. the may individual offer It is clear inducements is allowed from looking totocontinue retire at both before to purchase individual eligibilitycoverage and for likely CHAMPUS than Other non-working a 5.5 individuals (1.6to 0.5have 1.4 employment-based 1.1 0.1 1.3 insurance, 1.2 between the ages of 55 and 64 are more likely to have Medicare coverage Non-Working 21% 26'_ 13'_. 14'_', 3"/, 8% 15 % participating in the labor force because they are disabled. The major empirical • In 1992, the near-elderly comprised 8 percent (21.2 million) of the total U.S. 64, did not work because they were either ill or disabled, 14.5 percent were low cost Never post-retirement Worked health insurance 0.01 is an incentive for 0.004 the near elderly covered Uninsured by some form of29. health I insu 7.0 rance, this 15.0 is the only 4.0 age cohort 2.7 in 0.4 Source: EBRI tabulations of the Marcia, 1993 supplement to the Current Population Survey Before the employer public through programs a behavior large group such that , as there the Social tris ansition likely Securityto is be and difficult considerable Medicare. without These savings access events over to affordable may the cost both but many nonworking individuals also had employment-based coverage. For because they are more likely to be disabled and qualify for the Social Security difficulty population. in confronting By 2020, this thecohort deteriorating is projected health to rhypothesis ise to almostis 14 thepercent absence ofof retired, and 12.2 percent were taking care of their home or family. to which aNumbers retirewomen early. do not match are The more Foste table r2likely because Higgins than individuals survey men to afound rebe assigned uninsu that r to ed among prima(table ry la source rge4).employe of Women coverage rs in example, of health be purchasing a result insurance. EBRI of, c and tabulations overage r The esult availability asin, indicate anchanges individual. that ofin reti 40.3 an reeindividual's percent health of benefits the health early is and an retirees important health had Disability Insurance program (DI). Because of their higher disability rates, the Source: Employee Benefit Research (percentage Institute within tabulations age categories) of the March 1993 supplement to the total population. time series data on objectively measured health conditions among older only in this table; in table 2 individuals may have multiple sources of coverage. Senate Finance Subcommittee on Health for who Approximately offer retiree 0.01 health percent benefits neverto worked. retirees under the age of 65, the median this age cohort are less likely than men to have an attachment to the work _ _ _ 0_0 __ __ __ the Current Population Survey. component direct employment-based of early retirement health prog insu rams rance. of3employers These benefits attempting can come to in the near insurance elderly coverage. are less likely The}, to mayparalso ticipate increase in thethelabo portion r force ofthan income other that non-is Families and the Uninsured individuals. All of the measures available to the authors are socially _ _ _ _ _ _ 0 Total 100.0';;: 12.9'7, 43.7% 15.3 _;_ 11.4% 16.6% Employer Provision of Retiree Health Benefits age force, of and retirement are thuswas less62; likely two-thirds to have of access those to retiring group health were under insurance 65. For • EBRI analysis of the National Medical Expenditure Survey found that those devoted form downsize, of employer-sponsored to fo health r example. expenditures. Any p retiree rogram health to extend insurance coverage or continuation to this group of will elderlyTotal age Private groups. 100.0 10.8 44.6 16.8 12.2 15.6 conditioned, and the most abundant and accessible measures are self- The largest difference between the near elderly and younger cohorts in _._ _ _ __o __ those coverage. large Women employers do not purchase offeringmore retiree individual coverage, cove the rage median than age men,of but that affect the transition from worker to retiree. employer 100.0 9.7 49.9 _ 18.5 12.6 9.3 individuals between the ages of 55 and 64 on average use 37 percent more coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 Generally, only large employers have historically offered health insurance labo reported. r force participation is in the number of retirees among individuals aged direct I00.0 6.5 52.4 19.0 12.6 9.6 is much more expensive than group coverage, and the ability of nonworkers retirement In 1992, was the 64, nearwhile elderly the comprised median age8 percent of retirement (21.2 million) for thoseof small the total The near elderly were less likely to be uninsured in 1992 than other non- health care services than those between Hearing on 45 and 54 and over twice the health (COBRA). 4 Interestingly, 11.5 percent of individuals who were looking for indirect 100.0 17.2 44.1 17.5 12.5 8.7 55 to 64. Of those near elderly individuals who did not work at all in 1992 to retirees. The growth in the costs of health benefits coupled with changes in to purchase such coverage is dependent upon income. U.S. employe population rs not offering (table 1). retiBv ree 2020, healththisbenefits cohort is was projected 65, with toonly rise one-third to almost 14 other Pri va te 100.0 15.4 22.4 9.7 10.6 41.9 elderly age groups. Less than 13 percent of the population aged 55 to 64 were care Ageservices itself isof a individuals good indicator between of the the riskage of of needing 35 to 44. health care services. work were covered by an employment-based plan. These individuals are the almost accounting 39 percent of liabilities described for themselves retiree health as retir benefits ed. Only has1 led percent manyofemployers the 46-55 Health Care for Non-Working People Between the Ages of 55-64 Public 100.0 6.9 16.7 6.0 7.7 62.7 retiring percent before of the total age 65. population. 1 Given this projected growth, it is important uninsured, compared with 14 percent for the 45 to 54 age group and 18.5 EBRI analysis of the National Medical Expenditure Survey indicates that most likely using COBRA coverage as a bridge during job turnover. Medicare 100.(/ (1.5 3.8 2.2 5.0 88.5 who have offered health benefits to reconsider the nature and extent of that Barriers year olds todesc Health ribed Insurance themselves Coverage as retired. to consider this cohort's distinctive characteristics and sources of health • The most obvious difference between 55 to 64 year olds and other age percent Medicaid for the 25 to 44 I age (/0.0group. 10.2 The higher 42.2rates of i 9.3 nsurance 8.6 coverage 20.7 by individuals between the ages of 55 and 64 on average use 37 percent more Conclusion promise. A recent survey of employers by A. Foster Higgins 5 found that 42 CH AM PUS a 100.0 1{).5 25.7 19.4 23.0 21.5 groups is in labor force participation. Almost 38 percent of the near-elderly insurance The numbe coverage r of adults when aged assessing 18-64 the who impact lackedof health proposedinsur health ance ca cove re rage result from greater numbers of the near elderly purchasing individual health care services than those between 45 and 54 and over twice the health Differences in labor force participation manifest themselves in differences The near elderly do differ from younger cohorts in the source of their Uninsured 100.0 24.2 51.5 13.7 9.4 1.2 percent of the large employers William S. surveyed Custer, Research (those with Director more than 500 reforms. did not work at all in 1992. That compares with less than 20 percent of the cove roserage from and 24.1greater million eligibility (16.2 percent) for Medicare in 1988 due to 28.7 to disability. million (18.6 percent) in care services of individuals between 35 to 44. _ ' _ _000 _0_ in family While income it is clear as that can be the seen cost in of table health 2.care Thesemedian rvices isfamily an important income for health insurance coverage. Lower work force participation means that the Employee Benefit Research Institute employees) offered health insurance to retirees; 41 percent of those offering 1992. 46 to In55 1992, yearsamong who repo those rtedaged that18they and did over,notindividuals work in 1992. agedNine 18-24perwere cent, or (percentage within coverage categories) working component neaof r elderly consumption individuals of individuals is over $40,000, aged 55while to 64, the it ismedian particularly family near elderly have slightly lower rates of employment- based health insurance. Health Status coverage provide no contribution toward that coverage. Larger employers Women in this cohort are also much more likely than men to have most just likely under to 2 million be uninsured individuals (29.3 pe between rcent). Least the ages likely of 55 to and be uninsured 64, did not were work Employment is another good indicator of the risk of needing health care Total 100.0% 1(/().(1';_: 1(/0.0% 100.0% 100.0% 100.0% income for nonworking near elderly is between S20,000 and $30,000. They important are less for likely nonworkers to have inprthis ivateage health group.insur Individuals ance, and are unattached more likely to the to (those with more than 5,000 employees) are much more likely to offer retirees purchased individual coverage; coverage which is much more expensive Total Private 72.2 Washington, 60.1 D.C. 73.8 79.4 77.1 67.7 because they were either ill or disabled, 14.5 percent were retired, and 12.2 services. For the near elderly, EBRI tabulations show that those who are turn to public sources for health coverage. work Theforce degree may tobe which particularly labor forvulnerable ce participation in that is they determined are eitherby in choice poorer or is coverage employerand to contribute58.3to that 43.6 coverage. 66.6 Over 70 percent 7{/.6 of 64.1 employers 32.6 than group coverage through an employer. For example, 60.6 percent of percent were taking care of their home or family. employed Sources of have Healthtotal Insur health ance expenditures Coverage very near the level of younger - __ _ _ __ __ c direct 41.0 20.6 49.2 50.8 45.2 23.6 forced by deteriorating health is still controversial. Some researchers health or face higher costs in purchasing health insurance benefits, or both. surveyed with _0 more _ than 5,000 __ employees offered retirees - health benefits. women aged 55-64 had employment-based coverage and 15.5 percent had indirect 17.3 23.0 17.5 19.8 19.0 9.0 individuals, Nonworkersbut are the particularly non-working reliant individuals on public agedsources 55 to 64 or have on individually health 10 June 1994 g discount the possibility that changes in health status have increased the rate • Although the near elderly have lower labor force participation rates than other Although private the near elderly 13.9 have 16.6 lower labor 7.1 force participation 8.8 12.9rates than 35.0 other private individual coverage in 1992. This compared with 68.0 percent 3 Direct employment-based coverage is coverage in one's own name. Indirect employment-based purchased expenditures health 65 percent insurance. higherThe than nonworking the workingnear near elderly elderly, are and also those more Public 25.6 13.7 9.8 10.0 17.3 96.6 of withdrawal The Foster Higgins from the survey labor force foundby that the over near elderly, one-third attributing of those employers the coverage is coverage provided through someone vise's employer. other age groups, the majority of those aged 55 to 64 get their health younger age groups, the majority of those aged 55 to 64 get their health and 10.2 percent of men, respectively (table 4). Medicare 18.1 0.7 1.6 2.6 8.0 96.2 likely individuals to be uninsured who are disabled than workers. have expenditures Only a thirdthat of those are over not 2.5 working times those who increased offer rate retiree of ea coverage rly retirement had made to grchanges eater prefe inrences that coverage, for leisurwith e and thethe most Medicaid 7.6 11.3 7.3 4.6 5.7 9.4 o insurance o cove _ rage from an employment-based plan. A little over 64 insurance coverage from an employment-based plan. Table 3 shows that 64.1 of workers. 6 Between 1955 and 1985 the labor force participation rate of males aged 55 to (->4 declined by 4 The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 requires employers because they were disabled were covered under the Medicare program; common CHAMPUS change a resulting 3.{ in ) increased 2.4 out-of-pocket 1.8 costs 3.8 for retirees, 6.0 either 3.9 increasing availability of Social Security and other pension income. percent with over percent 19 health percent, ofof insurance the the compared near neaplans relderly -elderly with to offer ahave 4.5 have continued peremployment-based cent employment-based decrease access to for gr males oup health aged health health 45 insurance to insurance 54. insurance Some to qualified researchers The views expressed in this statement are solely those of the author and should not be attributed to the Uninsured 15.7 29.3 18.5 14.0 12.9 1.2 another 20 percent receive coverage through the Medicaid program. for attribute beneficiaries. increased this decline COBRA contributions to requires an incrcontinued ease to the in the premium, acces eases of forqualifying 18or months increased for for disability employees deductibles benefits. (29 months and Seefor D.O. the Employee Benefit Research Institute, its officers, trustees, sponsors, or other staff. The Employee Benefit coverage. This compares with 70.6 percent for individuals aged 45 to 54 and coverage. Although This the compares literature with on the 71health percentand for economic individuals status aged of 45the to 54 near and Note: Details may not add to totals because individuals may receive coverage from more than Research Institute is a nonprofit, nonpartisan, public policy research organization. Parsons disabled) , "The and 36 Decline monthsinfo Male r qualifying Labor Fo spou rceses Participation," and dependent Journal children. of Political Some Economy states also have one source. _o_ __ %%_ 66.6 continuation (February 67 percent percent 1980): of for focove r117-134, individuals individuals rage and laws.J. Bound, See aged aged Employee 25 25 "The to to Health 44. 44. Benefit Almost The and Resea nea Earnings r 13 rchelde pe Institute, rof r cent lyRejected ar of Fundamentals e mo the Disability re near- likely of elderly As the is ambivalent near elderly for become the group less as connected a whole, toit the is clear workplace, that foreither many aln Employee Insurance cludes Ber only Applicants," _efit the Progra retired ms Americar ,military 4th edition l Eand corlomi (Washington, members c Reviewof(June th DC, eir 1989): families 199(}), 48 for 2 provided -503, morefor information alternative coverage through about 2 In order to qualify for disability benefits, an individual's disability should be expected to than elderly otherhave age agroups health to insurance have individually policy purchased purchasedindividually, private insurance compared individuals through theiraged own55separation to 64 health or is that a majo of ar spouse, determinant the sou of rcelabor of health force the theo thefederal ries Civilian on law, the Health decline and J. and G in rube Medi ther,c male al andProgram labor B.C. Madrian, force for participation the "Health Uniformed Insu rate. r Sance ervice Availability and the Civilian and the 1See last at U.S. least Department 12 months.of In Commerce, addition, there Bureau is aofmandatory the Census,5-month Projections waiting of theperiod Population before of the 0 0 0 Retirement with Health 8.8 andpercent Decision Medical,"for Program NBER individuals Working for the Paper Daged epartment No. 44 4469 toof54, Veterans' (Cambridge, and 7.1 Affairs. percent MA: National Exclude in s theBureau ac25 tive toduty of 44 insurance, plans. disability United States Almost benefits ,and by Age, 13 the begin; pe Sex financial rcent ,the anrd efore, Race: have consequences disabled 1988 a health to 2080 individuals , insu Cur of rent rance pu ar rPopulation e chasing more policy likely purchased health Reports, to need insurance Sesome ries P- fo 2r5, m no. of Suite 600 participation and economic status. The sources of income may differ for the ¢o E 5A. Economic Foster Research, Higgins, National 1993), forSurvey a listingorofEmployer state laws. -SponsoredHealth Plans/1993. individual 1018 military (Washington personnel coverage , DC: and in the U.S. members interim. Government of their Printing families.Office, 1989). 2121 K Street, NW age group. coverage individually, change. compared Individual with 8.8 health percent policies for individuals are availableaged to the 45 to near 54,elderly, and 7.1 near elderly in cornparison with younger cohorts, and the total income may - _._ _ o_ o _ E Washington, DC _ E_ _8 c _ 20037-1896 = _ _ o _ c o 0 202-659-0670 Fax 202-775-6312