The interrelationship between the health status and work activity of older men plays a central role in at least three current controversies about the direction of public policy: whether the average health levels of older men have deteriorated, remained the same, or improved over the past 25 years; whether retirement status influences health status; and whether recent improvements in mortality have selectively favored individuals at higher risk of disablement, thereby contributing to pre- and post-retirement health trends. Data from the National Longitudinal Survey Panel of Older Men covering the period from 1966 to 1981 were subjected to a Markovian analysis to cast further light on these policy issues. The results suggest that health levels of older men have deteriorated over the past two decades, partly as a consequence of improvements in life expectancy. These health trends have contributed to the observed decline in labor force participation of this population subgroup. Little evidence was found, however, to support the claim that retirement harms health status. (MN)