October 2004

Grant Results

SUMMARY

From 1999 to 2003, investigators from the National Academy of Social Insurance analyzed the complex American system for providing health care coverage to and wage replacement for people who lose their connection to work.

The focus of the research — on the second half of the work life — allowed investigators to explore solutions to key challenges to America's health and income security systems in the next two decades as baby boomers age.

The academy is a Washington-based nonprofit organization dedicated to promoting informed policy-making on social insurance.

Key Findings
The principal investigator reported the following findings in a series of seven Health and Income Security for an Aging Workforce briefs:

  • Income, educational attainment and health status have the largest effects on having health insurance, as well as the type of insurance coverage a 55–64 year old has.
  • Although workers' compensation continues to compensate workers for acute short-term injuries, the availability of benefits for permanent disabilities associated with aging appears to be declining in many states.
  • Employers are cutting back on retiree health benefits and requiring more cost sharing from former employees to pay for these benefits.

Key Conclusions
The investigators concluded that strategies to accommodate an aging workforce required pursuing two goals simultaneously:

  • Increasing opportunities for people in their 50s, 60s and 70s to work longer and retire later when they are willing and able to do so.
  • Ensuring secure and humane policies for health coverage and income continuity for people who cannot work longer or who should not be expected to do so.

Funding
The Robert Wood Johnson Foundation (RWJF) supported this project through a grant of $750,000.

 See Grant Detail & Contact Information
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THE PROBLEM

Health and well-being are strongly affected by income and health care access, which in turn depend on a person's connection to the workforce. Workers tend to face greater disruptions in their income security or health care access during the second half of their work life, when life events such as acute illness, chronic conditions, disability, involuntary job loss, widowhood and caregiving responsibilities for a parent are more likely to occur.

These risks begin to increase significantly at age 50 — well before the normal retirement age. As baby boomers age, the numbers of workers in these higher-risk age groups will rise: the share of the workforce over age 45 is projected to grow from less than one-third to more than 40 percent in the next decade and the share over age 55 will rise further in the following decade.

An older workforce puts pressure on benefit programs offered by employers (short-term and long-term disability insurance, health insurance and pensions), states (workers' compensation, unemployment insurance and Medicaid) and the federal government (Social Security disability and Medicare).

Most prior research has focused on these programs one at a time, but often changes in one system have unintended consequences on the others and on the families they serve. For example, as workers' compensation plans tighten rules on how they will compensate work-connected impairments that are exacerbated by aging, the cost for these conditions can be shifted to employer health insurance, Medicaid or Medicare. Insurers, employers and state and federal policy-makers need to understand these interactions in order to improve the overall system and avert a policy crisis as the baby boomers age.

Before the RWJF grant, the National Academy of Social Insurance — a Washington-based nonprofit organization dedicated to promoting informed policy-making on social insurance — received a seed grant of $50,000 from the Upjohn Institute for Employment Research to develop a research agenda for this important policy area.

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RWJF STRATEGY

Federal policy-makers and the media are increasing their attention to the baby-boom generation after they are retired and the challenges this will pose for Social Security, Medicaid and Medicare. However, the threat to workers' income and health security before they reach retirement age has not been studied in a coordinated way. RWJF aimed to raise the visibility of this problem and to make related policy recommendations.

To accommodate an aging workforce, RWJF is pursuing a four-part strategy that builds on previous work to improve the quality of chronic care. Its investments seek to do the following:

  • Define and measure the quality of outpatient care at the individual practice and provider levels.
  • Build consumer and purchaser demand for public reporting of quality measures and for the delivery of high-quality care.
  • Line up forces within specific local markets to achieve public reporting and facilitate improvements in care (e.g., purchaser demand, measurement, consumer demand, provider improvement efforts, provider competency, leadership).
  • Track and communicate national progress on the Foundation's quality strategy.

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THE PROJECT

This project, conducted by investigators from the National Academy of Social Insurance, consisted of an analysis that cuts across the multiple systems for providing health care coverage and wage replacement to people who lose their connection to work. By focusing on the second half of the work life, investigators sought to explore ways to adapt health and income security systems to meet the challenges posed by the aging of the baby boom generation. The project engaged experts from across multiple disciplines, including representatives from insurance industry, consumers, employers, researchers and policy-makers.

At the outset, project staff sponsored a national conference, "Ensuring Health and Income Security for an Aging Workforce," January 26–27, 2000, in Washington. Immediately following the conference, on January 28, project staff convened an advisory group of experts (see the Appendix for a list of members) to reflect on the work presented and discuss priorities for the project.

Under the guidance of this group, project staff developed and carried out a research and dissemination agenda that aimed to expand the dialogue among experts in health policy and income policy. The goal of this dialogue was to build policies in both areas that strengthen the well-being of workers in the second half of their work lives. Major activities included conferences, workshops, seminars, congressional testimony and publications.

Other Funding

The federal Social Security Administration ($375,000) The DaimlerChrysler Fund and Ford Motor Company provided additional support.

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FINDINGS

The principal investigator reported the following findings in a series of seven Health and Income Security for an Aging Workforce briefs, published by the grantee organization between 2000 and 2003.

  • Income, educational attainment and health status have the largest effects on having health insurance, as well as the type of insurance coverage a 55–64 year old has. Thus, the "more fortunate" — those who are relatively healthy, with higher educational attainment and higher incomes — are more likely to have employer-sponsored or individually purchased insurance; the "less fortunate" — those who are less healthy, less educated and lower income — are more likely to have public insurance or be uninsured.
  • Although workers' compensation continues to compensate workers for acute short-term injuries, the availability of benefits for permanent disabilities associated with aging appears to be declining in many states. This trend is likely to shift benefit costs to other social and private insurance. To the extent that other programs do not replace earnings lost due to permanent disability, these costs will shift to workers and their families.
  • Employers are cutting back on retiree health benefits and requiring more cost sharing from former employees to pay for these benefits. Yet the proportion of retirees who say they have employment-based coverage was stable in the 1990s. Because some of the cutbacks in retiree health benefits are applied only to newly hired workers, the impact on retirees may become evident only gradually over the next few decades as baby boomers retire. Questions about the role of the Consolidated Omnibus Budget Reconciliation Act (COBRA) for early retirees and disabled individuals remain — including how they will pay for it and what they will do for health insurance coverage when COBRA ends. COBRA gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce and other life events.
  • Comparing the outcomes of workplace injuries in three states — California, Washington and Wisconsin — suggests that older workers are more likely than their younger counterparts to have permanent disabilities as a result of those injuries. In Wisconsin, for instance, those with benefits for permanent disability account for 28 percent of injured workers age 55 and older compared to 21 percent of those ages 35–54. This is true even though older workers have fewer workplace accidents. In addition, older workers suffer larger wage losses over the first few years after injury, have lower wage replacement rates from workers' compensation benefits, and experience more injury-related days of nonemployment.
  • Lowering the Medicare eligibility age to 62 would result in near universal health care coverage among 62- to 64-year-olds. People who purchase individual insurance in the market — as well as the uninsured — could benefit from Medicare coverage. The change would reduce employer costs for retiree health benefits and lower both retiree and employer costs for COBRA continuation coverage. Lowering the automatic eligibility age to 62 would increase Medicare spending by about $5.4 billion a year (in 2000 dollars). Net federal spending would be about $5 billion higher, because Medicare would pick up some costs currently paid by Medicaid. State Medicaid outlays would fall by about $0.3 billion.
  • Policies that would reduce or eliminate Social Security benefits for early retirees could have adverse consequences for older workers in poor health. About as many 62- to 64-year-olds classified as severely disabled receive early retirement benefits as receive disability benefits from Social Security Disability Insurance or Supplemental Security Income. The evidence suggests that benefits for Social Security early retirement serve as a substantial, albeit unofficial, disability program for some early retirees.

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CONCLUSIONS

The advisory group concluded that strategies to accommodate an aging workforce required pursuing two goals simultaneously:

  • Increasing opportunities for people in their 50s, 60s and 70s to work longer and retire later when they are willing and able to do so.
  • Ensuring secure and humane policies for health coverage and income continuity for people who cannot work longer or who should not be expected to do so.

Communications

Project staff published one book on the themes explored in this project (Ensuring Health and Income Security for an Aging Workforce), along with four articles in Social Security Bulletin and seven briefs (available online). Project staff also sponsored three conferences, five workshops and three seminars, and presented testimony to the Subcommittee on Social Security of the House Committee on Ways and Means. (See the Bibliography for details.) A number of major news outlets — including the Miami Herald, CNN Money, the Des Moines Register and the Kansas City Star — also cited issues and facts relating to this project.

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LESSONS LEARNED

  1. Researchers in this field must conduct analyses that cut across multiple systems in order to understand how the systems intertwine and interact. This project, the first crosscutting project in the field, demonstrated the value of cross-programmatic assessment of national income and health security policy. The broad approach helped to identify common themes in diverse fields. According to the project director, people who participated in this project's events were engaged and energized by the interaction with scholars from other disciplines and perspectives. (Project Director)

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AFTER THE GRANT

The project concluded with this grant. However, according to the project director, this project shaped the later agenda of the National Academy of Social Insurance. A conference that the Academy held in Washington in January 2004, "In Search of Retirement Security: The Changing Mix of Social Insurance, Employee Benefits, and Personal Responsibility," built upon, in part, the work of this project.

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GRANT DETAILS & CONTACT INFORMATION

Project

Risks in the Second Half of Work Life: Ensuring Health and Income Security

Grantee

National Academy of Social Insurance (Washington,  DC)

  • Amount: $ 750,000
    Dates: June 1999 to November 2003
    ID#:  036622

Contact

Virginia P. Reno
(202) 452-8097
vreno@nasi.org

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APPENDICES


Appendix 1

(Current as of the time of the grant; provided by the grantee organization; not verified by RWJF.)

Advisory Group

Janet Shikles, Chair
Independent Consultant
Portland, Ore.

Richard Burkhauser
Chair and Professor
Department of Policy Analysis and Management
Cornell University
Ithaca, N.Y.

John Burton
Professor of Labor Studies and Employment Relations
Rutgers University
New Brunswick, N.J.

Judy Feder
Dean and Professor
Institute for Health Care Research and Policy Georgetown University
Washington, D.C.

Paul Fronstin
Senior Research Associate
Employee Benefit Research Institute
Washington, D.C.

Teresa Ghilarducci
Associate Professor
Department of Economics
University of Notre Dame
Notre Dame, Ind.

Janice Gregory
Vice President
ERISA Industry Committee
Washington, D.C.

W. David Helms
President and CEO
Academy for Health Services Research and Health Policy
Washington, D.C.

Jay Himmelstein, M.D.
Director
Center for Health Policy and Health Services, University of Massachusetts
Worcester, Mass.

Jim Hinchman
Deputy Executive Officer
National Research Council
Washington, D.C.

H. Allan Hunt
Assistant Executive Director
W.E. Upjohn Institute for Employment Research
Kalamazoo, Mich.

Marilyn Moon
Senior Fellow
Urban Institute
Washington, D.C.

Sean O'Brien
Senior Policy Analyst
AFL-CIO
Washington, D.C.

Dallas Salisbury
President
Employee Benefit Research Institute
Washington, D.C.

Margaret Simms
Vice President for Research
Joint Center for Political and Economic Studies
Washington, D.C.

Lawrence H. Thompson
Senior Fellow, Urban Institute
President, National Academy of Social Insurance
Washington, D.C.

Paul J. Yakoboski
Director, Policy Research
American Council of Life Insurers
Washington, D.C.

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BIBLIOGRAPHY

(Current as of date of this report; as provided by grantee organization; not verified by RWJF; items not available from RWJF.)

Books

Budetti PP, Burkhauser RV, Gregory JM and Hunt HA. Ensuring Health and Income Security for an Aging Workforce. (Proceedings from the January 26–27, 2002 conference, "Ensuring Health and Income Security for an Aging Workforce"), Kalamazoo, Mich.: W.E. Upjohn Institute, 2000.

Articles

Leonesia M et al. "Early Retirees Under Social Security: Health Status." Social Security Bulletin, 63(4): 1–16, 2000.

Rappaport A. "Variation of Employee Benefit Costs by Age." Social Security Bulletin, 63(4): 47–65, 2000.

Wagner CC et al. "Holder Workers' Progression from Private Disability Benefits to Social Security Benefits." Social Security Bulletin, 63(4): 27–37, 2000.

Wittenburg DC et al. "How Raising the Age of Eligibility for Social Security and Medicare Might Affect the Disability Insurance and Medicare Programs." Social Security Bulletin, 63(4): 17–26, 2000.

Reports

Biddle J, Boden LI and Reville RT. Older Workers Face More Serious Consequences From Workplace Injuries. Health and Income Security for an Aging Workforce Brief No. 5. Washington: National Academy of Social Insurance, 2003. Available online.

Burton JF and Spieler E. Workers' Compensation and Older Workers. Health and Income Security for an Aging Workforce Brief No. 3. Washington: National Academy of Social Insurance, 2001. Available online.

Fronstin P and Reno V. Recent Trends in Retiree Health Benefits and the Role of COBRA Coverage. Health and Income Security for an Aging Workforce Brief No. 4. Washington: National Academy of Social Insurance, 2000. Available online.

Johnson R. When Should Medicare Begin? Health and Income Security for an Aging Workforce Brief No. 6. Washington: National Academy of Social Insurance, 2003. Available online.

Leonesio MV, Vaughan DR and Wixon B. Increasing the Early Retirement Age Under Social Security: Health, Work and Financial Resources. Health and Income Security for an Aging Workforce Brief No. 7. Washington: National Academy of Social Insurance, 2003. Available online.

Reno V and Eichner J. Ensuring Health and Income Security for an Aging Workforce. Health and Income Security for an Aging Workforce Brief No. 1. Washington: National Academy of Social Insurance, 2000. Available online.

Swartz K and Stevenson B. Health Insurance Coverage of People in the Ten Years Before Medicare Eligibility. Health and Income Security for an Aging Workforce Brief No. 2. Washington: National Academy of Social Insurance, 2000. Available online.

Sponsored Conferences

"Ensuring Health and Income Security for an Aging Workforce," National Academy of Social Insurance, January 26–27, 2000, Washington. Attended by 400 registrants representing 120 organizations, including the Social Security Administration, the Urban Institute, National Committee to Preserve Social Security and Medicare, and the National Council of Senior Citizens. Five keynote presentations, five panels and five workshops.

"Disability, Health and Retirement Age: Challenges for Social Security Policy," National Academy of Social Insurance, September 22, 2000, Washington. Attended by 250 registrants representing 80 organizations, including the American Association of Retired Persons, National Women's Law Center, and the Agency for Healthcare Research and Quality. Two keynote presentations and three panels.

"The Future of Social Insurance: Incremental Action or Fundamental Reform?" National Academy of Social Insurance, January 24–25, 2001, Washington. Attended by 400 registrants representing 180 organizations, including the Older Women's League, Foundation for International Studies on Social Security and Alliance for Retired Americans. Three keynote presentations, five panels and five roundtables.

Sponsored Workshops

"Risk in the Second Half of the Work Life: Health and Income Security for an Aging Work Force," at the annual meeting for the Association for the Public Policy analysis and Management, November 1999, Washington. Attended by 25 registrants representing 18 organizations, including national Association of State Workforce Agencies, Rutgers University and the Social Security Administration.

"Disability Income Policy: Opportunities and Challenges in the Next Decade, a Policy Education Seminar" (seminar), National Academy of Social Insurance, December 15, 2000, Washington. Attended by 250 registrants representing 80 organizations, including the American Association of Retired Persons, National Women's Law Center, and the Agency for Healthcare Research and Quality. One keynote presentation and four panels.

"Implications of an Aging Workforce for Social Insurance and Employee Benefits" (seminar), National Academy of Social Insurance, November 6, 2001, Washington. Attended by 40 registrants representing 25 organizations, including the Agency for Healthcare Research and Quality and Price Waterhouse Coopers. Five panels.

"The Challenges an Aging Workforce Poses for the Workers' Compensation System," at the annual meeting for the Association for Public Policy Analysis and Management, November 2001, Washington. Attended by 25 registrants representing 15 organizations, including the RAND Institute for Civil Justice, the Social Research and Demonstration Corporation, and the Liberty Mutual Research Center for Safety and Health.

"Health Care Coverage for Pre-Medicare Adults (ages 50–64) Who Do Not Have Insurance Through an Employer," at the annual meeting for the Association for Public Policy Analysis and Management, November 2001, Washington. Attended by 20 registrants representing 13 organizations including Mathematica Policy Research, the Employee Benefit Research Institute and the Congressional Research Service.

"Public and Private Sector Strategies for an Aging Workforce," at the Industrial Relations Research Association's National Policy Forum, June 2002, Washington. Attended by 100 registrants representing 65 institutions, including the University of Notre Dame, the Urban Institute and American University.

"The Impact of Eliminating the Medicare Waiting Period after Onset of Disability," January 31, 2003, Washington. Attended by 30 individuals representing 22 organizations, including the National Women's Law Center, the Congressional Budget Office and the Robert Wood Johnson Foundation. One keynote presentation.

"Research Priorities on Unemployment Insurance" (seminar), National Academy of Social Insurance, November 21, 2003, Washington. Attended by 36 registrants representing 28 organizations, including the National Association of State Workforce Agencies, the National Urban League and the Department of Labor.

Presentations and Testimony

Virginia Reno and Patricia Owens (consultant), "Findings of the National Academy of Social Insurance Disability Policy Panel: Balancing Security and Opportunity — The Challenges of Disability Income Policy," to the Subcommittee on Social Security of the House Committee on Ways and Means, July 11, 2002, Washington.

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Report prepared by: Robert Crum
Reviewed by: Kelsey Menehan
Reviewed by: Marian Bass
Program Officer: Michael B. Rothman

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