Wharton Pension Research Council Working Papers

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Working Paper

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Retiree medical care expenditures in the United States are growing at a rapid rate, while and the retired portion of the population is increasing. This puts pressure on government and employer programs providing retiree health care coverage. Retirees also face increasing challenges in gaining access to affordable coverage, particularly before eligibility for Medicare. In this chapter we assess prospects for US retiree health coverage and the challenges, risks, and roles of employers, Medicare, and retirees in providing and financing it. We discuss both traditional approaches to retiree health benefits, where the employer assumes most risk, and new defined contribution approaches, where significant risk is shifted to the retiree. We also review government benefits for retirees including new Medicare prescription drug benefits. We model future retiree health care costs and opportunities to save before retiring, highlighting public policy obstacles and issues for employer-provided retiree health benefits


The published version of this Working Paper may be found in the 2006 publication: Restructuring Retirement Risks.

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Copyright/Permission Statement

All findings, interpretations, and conclusions of this paper represent the views of the author(s) and not those of the Wharton School or the Pension Research Council. Copyright 2005 © Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.


The authors would like to thank Judy Hamers and Barbara McGeoch of Mercer Human Resource Consulting for their assistance in preparing this report. The opinions and conclusions stated here are the authors’ and should not be construed as those of Mercer Human Resource Consulting or any of its other associates.

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Economics Commons



Date Posted: 30 August 2019