I’ve written often about the problem of ?job lock.? It’s a phenomenon related to our goofy, third-party payment system for consuming health care. Because of tax and regulatory policies, employers are the main source of health plans for most non-retired Americans. Given the difficulty and tax bias involved in purchasing individual plans, many workers feel trapped at a job they don?t enjoy or in a career they?d like to change because they aren?t sure if they could keep similar health coverage after a move.
The solution is, of course, for individuals to own their own health plans, such as they own their own car and home insurance, and to be allowed to accumulate their own funds tax-free in health savings accounts, which are inherently portable.
What I haven?t seen recently is any quantification of the job-lock problem, so I was pleased to read the following piece from the National Center for Policy Analysis today:
Economist Scott Adams says that because employers are the primary providers of health insurance in the United States, some people who would prefer to leave their current jobs may remain to avoid losing health benefits.
Some legislation has been put in place to reduce this phenomenon, called “job-lock.” Adams suggests job-lock is inefficient because it impedes the optimal allocation of labor, so it’s important not only to identify whether it exists but also to quantify its impact. In his research, Adams finds that:
? Among men aged 25 to 55 with spouses, there is an approximate 22 percent to 32 percent reduction in job mobility stemming from health insurance coverage.
? Slightly more job lock is found among married women.
? It is estimated that job lock has increased since 1988.
Overall, Adams results are consistent with earlier studies that found job mobility was reduced by 26 percent to 31 percent due to the lack of portability of employer-provided health coverage.
Source: Scott J. Adams, “Employer-Provided Health Insurance and Job Change,” Contemporary Economic Policy, July 2004.
