Obamacare isn’t spurring earlier retirement – at least, not yet

Helen Levy, University of Michigan

Helen Levy, University of Michigan

The Affordable Care Act is doing plenty of good for older Americans, but one thing it is not doing is convincing them to retire early.

One prediction of the impact of the healthcare law, commonly known as Obamacare, was that the ACA would end job lock – the phenomenon of workers hanging onto jobs just for the health insurance while waiting to become eligible for Medicare at age 65.

Instead, the ACA’s guaranteed issue of insurance would let them leave the world of full-time work for more flexible self-employment, start businesses or launch encore careers – or just retire.

But new research shows the ACA has not turned the job-lock key – at least not yet. A team of University of Michigan researchers studied Census Bureau employment data for 2014 – the first full year of the law’s implementation – and found no evidence of a higher rate of retirement, or a shift to part-time work, for Americans age 55 to 64.

Still, the ACA has had an enormous, positive impact on older Americans.

At the end of the ACA’s first full year, the share of Americans ages 50 to 64 without health insurance had fallen by nearly a third, to just 8 percent, according to research by the Urban Institute and AARP. The uninsured rate was even lower in the 27 states that chose to expand Medicaid eligibility – just 5.5 percent at the end of last year.

Helen Levy, a research associate professor at the University of Michigan’s Institute for Social Research and co-author of the Michigan study, thinks uncertainty about the ACA may have kept some older workers on the job who otherwise would have exited.

In part, she credits the lengthy, failed battles by Republicans to repeal the law in Congress or upend it in the courts. Another factor, she thinks, was the messy launch of the federal health exchange website, Healthcare.gov, and the ensuing bad publicity.

Learn more at Reuters Money.


  1. Why are they not retiring sooner? That should have been addressed. Working longer in retirement is a financial decision and health care cost is a reason why. Prior to the ACA you could pick up a health plan outside of work for far less premium than the premium at work, so long as you didn’t have health conditions. Even after an employer contribution to the premium, it was still possible to find a cheaper plan outside of work in the private market.
    But now, with the ACA coverage requirements, premiums for individual plans are very close to premiums through an employer. As employers typically pay 50% or more of premiums through the workplace, individual plans outside the workplace now cost a lot more than through the workplace. Take pre-taxing into consideration and the cost for healthcare at work becomes far less than retiring then getting a comparable plan outside of work in the private market. Much lower cost at work becomes job lock.

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