Obamacare extends health insurance to tens of millions of Americans, assists the nation’s most vulnerable by outlawing the worst excesses of the private insurance industry, and keeps Medicare solvent for American seniors. And the Wall Street Journal observes that the landmark health law will prove a crucial asset to yet another segment of the American population: those who are are trapped in their current jobs out of fear for losing access to health insurance.
This phenomenon — known in the industry as “job lock” — is an unintended consequence of America’s primarily employer-sponsored health insurance system. Studies have shown that workers who don’t receive insurance through their employers are one and half times more likely to switch jobs than the workers who have employer-sponsored plans. Since insurance coverage can’t be shifted between jobs, some Americans remain in their current positions longer than they would have otherwise because of their fear of losing health coverage, since private insurance might prove unaffordable for them.
This problem is particularly prevalent among older employees in their 50s and 60s, some of whom remain in their jobs simply because they are waiting to qualify for Medicare coverage. Even aside from the fact that this dynamic forces some people to work longer than they might want to, it also creates an inefficient labor market, since workers might not switch over to higher-utility job in order to maintain continuous benefits.
Luckily, Obamacare’s insurance exchanges will allow individuals to purchase coverage on a statewide market, and the law gives consumers tax subsidies with which they can purchase care. Furthermore, small employers might be less likely to forgo hiring due to coverage costs, since Obamacare actually reduces smaller firms’ health care spending.
But proposals to raise the Medicare eligibility age from 65 to 67 would undo some of the progress made by Obamacare in this regard, forcing elderly Americans to work for even longer and exacerbating the “job lock” phenomenon — all while reducing health care spending marginally and shifting costs onto states, employers, and Americans’ health insurance premiums.