Ability to pay for retiree health benefits

This paper examines retired persons who received employer-provided health benefits in 1987. The sociodemographic, health, and economic characteristics of these elderly persons are compared to the total elderly population. Two methods of estimating retiree insurance purchase are considered and indicate 13% to 20% of retirees would be unable to afford benefits without an employer subsidy. The percentage of persons unable to purchase the employer-provided benefits drops significantly if some subsidy is maintained. The results indicate substantial differences in ability to purchase insurance by sociodemographic characteristics. The future of retiree health benefits in a reformed health care system is discussed.