Working Paper: NBER ID: w19566
Authors: Robert Clark; Melinda Morrill; David Vanderweide
Abstract: To moderate the rate of growth of retiree health insurance costs, employers can modify plans and move retirees into less expensive plans. We examine policy modifications implemented by the North Carolina State Health Plan. We investigate whether incentives produce the desired plan elections and whether these changes, along with cost shifting, produce the expected reductions in cost growth. Using individual-level administrative data, along with aggregated data on expenditures for retirees, we estimate the effects of the introduction and subsequent repeal of a Comprehensive Wellness Initiative for non-Medicare eligible retirees, as well as increases in coinsurance and copayments and the introduction of a premium for all retirees. Over a third of non-Medicare retirees shifted into the least generous plan between June 2009 and December 2012. The level effects on annual costs and unfunded accrued liabilities were relatively modest, but growth rates were diminished. Increases in the retiree premiums reduced projected costs.
Keywords: retiree health insurance; cost growth; policy modifications; public sector
JEL Codes: H75; I13; J32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| introduction of a comprehensive wellness initiative (I19) | significant shift of over one-third of nonmedicare retirees into the least generous health plan (I18) |
| increases in retiree premiums (J26) | reduced projected costs (H43) |
| policy changes (J18) | influence retiree behavior (J26) |
| policy modifications (D78) | significant shift in plan choices among nonmedicare retirees (J26) |
| policy changes (J18) | moderate cost growth (O49) |