PPACA could drive boomer retirement

By Allison Bell

August 1, 2013

Medicaid expansion and the new public health insurance exchange subsidies could lead to a sharp increase in early retirement rates.

Jeff Bradley, a consulting actuary at Milliman, makes that prediction in a commentary based partly on data from a group of academic researchers led by Craig Garthwaite.

Garthwaite's team looked at the effects of a sudden drop in access to public health coverage that affected 170,000 Tennessee residents in 2005.

Based on what happened in Tennessee, the team projects the Patient Protection and Affordable Care Act Medicaid expansion provisions could lead about 530,000 to 940,000 lower-income older workers to give up their jobs and sign up for Medicaid.

Bradley suggested the new exchanges, and rules that require carriers to sell all new individual coverage on a guaranteed-issue, mostly community-rated basis, also could give higher-income older workers an incentive to give up their jobs.

PPACA will let carriers sell the oldest insureds prices three times higher than the prices younger insureds pay, but that could still lower the older consumer's share of the cost of coverage in some states, especially if the consumer earns less than 400 percent of the federal poverty level and can qualify for subsidies, Bradley said.

A 55-year-old married couple, for example, might pay $13,461 per year for mid-level, "silver level" coverage if the couple has about $63,000 in annual "modified adjusted gross income."

If the same two people have just $62,000 in annual MAGI, they would pay only about $6,000 per year for coverage, Bradley said.

If an employer wants to keep boomer workers on the payroll, "workforce planning for 2014 and beyond may be critical," Bradley said.

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