Manufacturing firms' decisions regarding retiree health insurance

Abstract

The trend for employers to discontinue offering retiree health insurance has profound implications for a large and growing share of the U.S. older population. The authors explore factors related to the firm's decision to offer and contribute to retiree health insurance using data from manufacturing firms. Their findings indicate that while firm characteristics, such as size and age, affect the probability that a firm offers retiree health insurance, employer contributions to this benefit are significantly related to the firm's financial performance and the alternative insurance options available in the market. The article concludes with a brief discussion of policy-related measures with potentially important implications for the future of retiree health benefits.