The magnitude of just how retirement affects the use of health care services is has remained obscure in the literature, involving as it does various incentives for individuals to change their health-seeking behavior. A possible explanation for the ”retirement-consumption drop”, for instance, may involve time cost. As the opportunity cost of time decreases at retirement, and households cut ties to the labor force, expenditures on such ”work-related” categories should decrease even if there are no changes made to lifetime resources or preferences. Similarly, a decrease in the opportunity cost of time after retirement could encourage retirees to utilize more health care.
Another component of health care that should be more heavily evaluated involves financial cost. Indeed, individuals have the opportunity to reduce their health care expenses after retirement because their income is comparatively lower.
Also, medical expense decisions are often made based on health insurance costs and benefits. In the United States, the bulk of medical costs post-retirement are paid by the state only; this policy, by extension, creates a strong incentive for individuals to retire. The total medical expenses rise substantially for these retirees, with their out-of-pocket expenses dropping substantially.
By contrast, state-provided health care is available before and after retirement in China, where workers are mandatorily enrolled in the social-health-insurance system. An MSA approach gives individuals full control over how their resources are allocated to provide for health-care services over time. Retirees are still covered under the same health insurance, only with lower coinsurance rates and decreased cost sharing. As such, individuals have the opportuny to postpone medical expenses until after retirement, carrying their MSAs over accordingly.
The results of this paper provide some insight into health-seeking behaviors, specifically from an economic perspective. The data display patterns that are in sharp contrast to that of the US. Instead of keeping a smooth, consistent pattern of out-of-pocket expenditures, females in China are willing to increase their out-of- pocket expenditures in order to take advantage of better health insurance benefits and increased medical care. As such, a distinct jump in health care resource utilization occurs when females retire. By contrast, males show smooth, consistent patterns in total medical expenditures as well as out-of-pocket expenditures. These consistent medical expenses continue after males retire.