Effects of the Public Transfer and Asset Income on the Health Care Utilization of the Retirees

Abstract

Abstract

Background

Retirement brings changes in the household income level and composition. Although previous studies have suggested that the composition of retirement income is heterogeneous, the public transfer and asset income have been consistently reported as two major income sources for the retirees. Despite the changes in income, health care spending remains a major household expenditure item of the retirees. Although the characteristics of retirement income are examined in depth, studies on effects of the source of retirement income on health care utilization are limited. This study aims to estimate effects of the public transfer income and asset income on health care utilization of the retirees. In addition, determinants of health care utilization of the retirees are examined.

Methods

The study sample is drawn from the Korean Retirement and Income Survey data in 2011 and 2013. The sample consists of households in which the head is 50 and over and retired (n=909). Dependent variables are household health care utilization status and health care spending. Health care spending is log transformed. Independent variables include dependent income sources, share of asset income, share of pension income, share of social security income, total household income, sex, age, education level, marital status, chronic diseases status, disability status, limitations on Activities of Daily Living status, private health insurance status, and number of family members. K-means cluster analysis was used to cluster the sample into four income dependent groups (asset, private transfer, pension, social security) based on their household income composition. Two-Part Model analysis was used to estimate the effect of household characteristics on health care utilization.

Results

The results of the Two-Part Model analysis suggest that the dependent income source and the share of pension income and social security income are significant predictors of health care utilization of the retirees. Compared to the asset income dependent, the odds of using health services significantly decreased for the social security income dependent. In addition, the health care spending significantly decreased for the pension income dependent and the social security income dependent. Increase in the share of social security income significantly decreased the odds of using health services. Increase in the share of pension income and social security income both significantly decreased the health care spending. The Need and demographics were strong predictors of the odds of using health services. The Enabling, demographics, and Need characteristics were strong predictors of the health care spending.

Conclusions

The findings of this study are the following. First, the household income compositions of the retirees in Korea are heterogeneous. Although pension income and social security income were the primary source of retirement income, retirees still heavily rely on private transfers. Second, the income composition of the retirees is significant predictor of the health care utilization. Both the share of each income source and the dependent income source has strong implications on the retirees use of health care. Third, the Need characteristics and number of demographics were important predictors of the odd of using health services. The health care spending was significantly affected by household characteristics of Need, Predisposing, and Enabling in nature.