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The Dynamics of Income-Related Health Inequalities Near Retirement

This paper estimates and decomposes income-related health inequality for people nearing retirement age in the US by analyzing data from Health and Retirement Study. To reveal the whole picture of health deterioration with respect to income ranking, we use Petrie et al. (2011)’s newly proposed income and health mobility, explicitly accounting for the dead in a longitudinal analysis. The results illustrate that income-related health inequality measured by applying the concentration index (CI) with an unbalanced panel dataset, explicitly accounting for the dead, is improved as the individuals born between 1931 and 1941 ages. The improvement in the CI, however, primarily comes from the high mortality rate among poor individuals. At the same time, CIs using a balanced panel dataset with a base weight, or re-weight with the Inverse Probability Weight (IPW) either did not improve or deteriorated as the cohort ages. A balanced panel dataset analysis generates misleading results of progressive health deterioration, while an unbalanced panel dataset analysis brings out the regressive deterioration. The findings may suggest that the balanced panel data analysis overestimates the Medicare effect. Some encouraging results include the insignificant health-related income mobility among those who are alive, which reveals the existence of the pension effect.