Health Insurance's Impact on Employment of Older Workers

According to a new paper published by the Center on Aging and Work/Workplace Flexibility at Boston College, health insurance costs are one factor that affects employer's employment decisions: "When faced with expensive healthcare, employers may cut back on hiring older workers, but not reduce their wages." On the employee side, older men in cities where health care costs are higher are more likely to stay in the workforce than retire; however, people with higher outside health care costs are not more likely to be employed, suggesting that employer decisions may be an influence.

The principal investigator of the paper--"Does Health Insurance Affect the Employment of Older Workers?"--was Joanna Lahey, Ph.D., an assistant professor at the Bush School of Government and Public Service at Texas A&M University. Among other things, she also investigated how state health mandates can be driving up some of these health costs. As for the options for employers, Lahey suggests:

As firms try to control the effect of rising health care costs on their bottom line, they will discover options other than decreasing employment. For instance, they can change their workforce composition and increase their use of part-time jobs that do not offer insurance benefits. Older workers with other sources of insurance benefits may find this option attractive. Firms may also consider hiring fewer workers for more hours.

Source: Center on Aging and Work/Workplace Flexibility Issue Brief No. 8 (June 2007)