Publications by Timothy Waidmann for Retirement Policy

Low-income Medicare beneficiaries are eligible for subsidies to help them pay premiums and cost sharing. However, these subsidies fall short of those contained in the Patient Protection and Affordable Care Act (ACA) that help low-income families afford adequate health coverage. In this report we consider policy options to reform Medicare's low-income subsidies to better align with ACA provisions. We estimate that a significant simplification in low-income protection and cost-sharing rules could greatly reduce burdens on the poorest and sickest beneficiaries. Depending on how they are implemented, these reforms could either reduce or only modestly increase total public spending.

At 40 percent of Medicare's and of Medicaid's costs, the 9 million dual eligibles who receive benefits from both programs, are a focus of efforts to slow growth in entitlement spending. But, given the two programs' responsibilities, policy-makers are relying far too heavily on states to find the solution. Dollars spent on dual eligibles are overwhelmingly federal; potential savings come from better management of Medicare-financed acute care services; and enhanced state, rather than federal, responsibility for overall spending increases the risk of cost-shifting to Medicare and may undermine quality of care for vulnerable beneficiaries.

This is a Methodological Appendix to a paper that explores options for reforming Medicare cost sharing. Using data from the Health and Retirement Study and the Medicare Current Beneficiary Survey, we consider how unified deductibles, alternative coinsurance rates, and a limit on out-of-pocket spending would alter program spending, beneficiary cost sharing, and premiums for supplemental coverage. We show that cost sharing reforms could provide better safeguards to beneficiaries with high costs than the current Medicare benefit structure and that policies could be structured in a way that would add little to overall program costs.

This paper examines the health and economic status of those who collect Social Security retirement benefits prior to the full retirement age. It uses a propensity score reweighting method to estimate the fraction who use early retirement benefits as a safety net against deteriorating health and who might be induced to apply for disability benefits (SSDI) or retire without income replacement if the generosity or availability of early retirement benefits were reduced. About one in five early retirees have health characteristics similar to SSDI beneficiaries, and thus might not be able to replace losses in benefit income with labor income.

Because a small fraction of individuals account for a large share of total health expenditures, insurers gain more by excluding high-cost people from coverage than by efficiently managing the care of enrollees. The incentives for insurers to avoid high-cost and high-risk enrollees affect not only the likelihood of health insurance coverage for the high-risk population, but also the cost and accessibility of coverage overall in the small-group and nongroup private health insurance markets. This paper identifies public policies that might address these problems in private health insurance markets more effectively and delineates the advantages and disadvantages of each.

Although the prevalence of late-life disability has been declining, how to promote further reductions has been unclear. We developed an analytical framework that compares the effects of different interventions on the prevalence of late-life disability. We considered three potentially high-impact intervention strategies: physical activity programs, depression screening and treatment, and fall prevention. We conclude that in the short run multi-component fall-prevention efforts have the greatest impact. At present, longer-term impacts cannot be assessed based on the current literature and may differ from short-run conclusions, since increases in longevity may temper the effect intervention strategies have on prevalence of late-life disabilities. (Milbank Quarterly 84(3): 493-520, 2006.)

This report details the development of a third version of MINT (Modeling Income in the Near Term), a tool for simulating the retirement incomes of members of the Baby Boom and neighboring cohorts. MINT3 can produce projections of economic and demographic characteristics in the year 2020, at the time of retirement, and for other years and ages. It can be used both to construct a baseline using alternative economic and demographic assumptions and to analyze the distributional consequences of a variety of Social Security policy changes.

This paper addresses the interplay between health and labor market behavior in the later part of the working life. We use the longitudinal Health and Retirement Survey to analyze the dynamic relationship between health and alternative labor force transitions, including labor force exit, job change and application for disability insurance. Specifically, we examine how the timing of health shocks affects labor force behavior. Controlling for lagged values of health, poor contemporaneous health is strongly associated with labor force exit in general and with application for disability insurance in particular. At the same time, our evidence suggests that controlling for contemporaneous health, poor lagged health is associated with continued participation. Thus, it appears that not just poor health, but declines in health help explain retirement behavior. We conclude that modeling health in a dynamic, longitudinal framework offers important new insights into the effects of poor health on the labor force behavior of older workers. (Labour Economics 1999 June; 6(2): 179-202).

Return to list of authors.