Skip to main content

Retiree health insurance for public school employees: Does it affect retirement? (Fitzpatrick 2014)

Absence of conflict of interest.

Citation

Fitzpatrick, M. D. (2014). Retiree health insurance for public school employees: Does it affect retirement? Journal of Health Economics, 38, 88-98.

Highlights

  • The study’s objective was to examine the impact of an Illinois Public Schools retiree health insurance program on the retirement rates of eligible staff ages 55 to 75.
  • The study used a nonexperimental approach to compare the retirement rates of eligible staff with those of staff who were not eligible and staff in years prior to the introduction of the health insurance program who would have been eligible. The author used data from the Illinois Public Schools' Teacher Service Record database from 1970 to 1992.
  • The study found that eligibility for the program was associated with an overall decrease in retirement age, with eligible staff more likely to retire at ages 55 or 56, but less likely to retire after age 65 compared with those who were not eligible for the program.
  • The quality of the causal evidence presented in this report is low because the study is a nonexperimental analysis that does not account for possible differences in the groups. This means we are not confident that the estimated effects are attributable to the Illinois Public Schools Teachers Retirement Health Insurance Plan; other factors are likely to have contributed.

Intervention Examined

Illinois Public Schools Teachers Retirement Health Insurance Plan

Features of the Intervention

The Illinois Public Schools Teachers Retirement Health Insurance Plan was first implemented in 1980. The program provides eligible Illinois Public Schools staff with health insurance when they retire. At the time, the health insurance premiums were subsidized by 50 percent. To be eligible for the retiree health insurance, Illinois Public Schools staff must be eligible for the state's pension program and have at least 8 years of experience in Illinois Public Schools. To be eligible for the state's pension program, Illinois Public Schools staff must be age 55 with at least 35 years of experience, age 60 with at least 10 years of experience, or age 62 with at least 5 years of experience. Eligible experience includes experience in Illinois Public Schools, private schools, the military, maternity leave, and other experience not specified by the author (a fee is required to count all experience outside of Illinois Public Schools). Staff age 55 are also eligible to receive reduced benefits if they have between 20 and 34 years of experience.

Features of the Study

The study is a nonexperimental analysis that used statistical models (difference-in-difference) to compare the retirement rates of Illinois Public Schools staff who were eligible for the Teachers Retirement Health Insurance Plan with staff who were not eligible and staff in years before and after the introduction of the health insurance program. The study uses data from the Illinois Public Schools' Teacher Service Record database on most Illinois Public Schools staff in the state from 1970 to 1992.

Findings

Employment

  • The author found that the retirement health insurance program was associated with an increase in retirement for eligible teachers ages 55 or 56, but a decrease for eligible teachers older than age 65 compared with those who are not eligible. Overall, the author estimates the program was associated with retirement two years earlier than average.

Considerations for Interpreting the Findings

The study is a nonexperimental study that does not account for possible differences in gender, race, or ethnicity between the groups. Differences in the groups could explain the study’s findings.

Causal Evidence Rating

The quality of causal evidence presented in this report is low because the study does not account for possible differences in the groups. This means we are not confident that the estimated effects are attributable to the Illinois Public Schools Teachers Retirement Health Insurance Plan; other factors are likely to have contributed.

Reviewed by CLEAR

August 2019

Topic Area