If demography is destiny, the American workforce is going to continue to get older as baby boomers age … and keep showing up for work. The high cost of health care may be one reason why.
Many older employees are declining to retire, and plenty of older applicants continue to seek new jobs, according to the Department of Labor. By 2024, the DOL found—just seven years from now—one out of four people in the labor force will be age 55 or older.
Even workers who do retire from traditional employment often stay connected to the labor economy through part-time or contract work.
Teri Morisi, branch chief at the Bureau of Labor Statistics, theorizes that some older employees are holding off on retirement because they want to hold onto comprehensive health insurance coverage through their employers. Few employers still offer health insurance to retirees, and those younger than 65 aren’t yet eligible for health coverage through Medicare.
This trend has practical effects on employers, notably in the cost of health benefits. Morisi notes that older workers tend to use more expensive medical services than young workers do. It costs a lot to prevent and treat many age-correlated health problems such as coronary disease, cancer and orthopedic complications. That tends to raise group premiums.
The Affordable Care Act was supposed to address the gap between early retirement and Medicare coverage by making health insurance accessible regardless of employment status or pre-existing condition.
In part, the ACA was intended to let older workers retire early or pursue freelance gigs and other employment alternatives without fear of going uninsured. In reality, especially in states that declined federal Medicaid funding, going without work often means going without health coverage.
If President-elect Trump follows through on his campaign promise to scuttle the ACA, the result may be an accelerate trend of older workers staying on payrolls mainly for their insurance benefits.
That’s especially true if whatever replaces the ACA does away with the premium subsidies that have allowed some older Americans to afford coverage on the health insurance exchanges.