LOVE, TOIL, AND HEALTH INSURANCE: WHY AMERICAN HUSBANDS RETIRE WHEN THEY DO

The provision of health insurance has previously been shown to be an important determinant of retirement timing among older Americans, but the existing literature has largely ignored some aspects of the interspousal dependence of health insurance benefits. Specifically, the literature examines only how retirement may affect the health insurance available to the potential retiree but not how it might affect a spouse's options. Using data from the Health and Retirement Study, I find that the impact a husband's retirement might have on a wife's health insurance options has a statistically significant impact on a husband's rate of retirement that is independent of considerations of his own health insurance options. In house holds where the wife is the only one at risk of losing affordable health insurance if the husband retires, the husband is 30% less likely to retire than if neither spouse is at risk (a 5 percentage point decrease in the retirement rate). Based on these findings, prior research is missing one avenue that changes to the Medicare eligibility age and health insurance policy changes through the Affordable Care Act might impact the labor supply of older workers. (JEL 113, J26, J32) I INTRODUCTION Extensive research has examined the important role of a man's health insurance source on his retirement decision, but this research has not been extended to account for how a husband's retirement might impact the availability of health insurance for a spouse. Although a health insurance source is often extended to both spouses, there are times when a retirement could have a divergent impact on each spouse's access to coverage, such as when one spouse is Medicare eligible and the other is not. Such scenarios have been ignored by the existing literature and provide an opportunity to examine the relative importance of each spouse's needs when house holds determine the timing of a husband's retirement. For other elements of the retirement decision, researchers have found that the joint benefit of the couple is not always maximized. For example, Sass, Sun, and Webb (2007) and Henriques (2012) found that the timing of a husband's initial Social Security claim is more likely to maximize his own expected benefit rather than the joint benefit of the couple. As changes to federal health insurance policy are considered and enacted, the answer to this question could have important implications in regard to labor force exits and, in turn, tax based revenue and the fiscal conditions of Medicare and Social Security. *Thanks to the Editor, anonymous referees, Charlie Brown, Jeff Smith, Tom Buchmueller. and David Albouy for their helpful comments, guidance, and support. Additional thanks to Melissa Boyle, Nzinga Broussard. Taryn Dinkelman, Ann Ferris. Samara Gunter, Jonathan Lanning. Matthew Rutledge, and seminar participants at the University of Michigan for their helpful input. All errors and omissions are my own. In the analysis using extensive data from the Health and Retirement Study (HRS) that follows, I present evidence that a strong relationship exists between a wife's health insurance needs and the timing of a husband's retirement, even independently of the husband's own health insurance concerns.' Consistent with previous research, I find that the retirement rate for husbands who would lose their low cost health insurance source upon retirement (regardless of whether their wives would as well) is 6 to 9 percentage points lower than for those who would not. Not examined in previous research is a similar decline of 5 percentage points in the rate of retirement among husbands in house holds where the wife, but not the husband, would lose her current health insurance source without having an observed affordable alternative. (2) These marginal effects represent a 30%-45% decline in retirement rates and are not statistically different from each other. Interestingly, the impact on retirement rates of a wife's health insurance options is dependent on her self-reported health while that for the husband's health insurance options is not linked to his health. …