Job Lock

Health system discourages innovation
Andy Sullivan, Reuters, May 28, 2009

I’ve been talking about “job lock” since long before I knew there was a term for it. It is perhaps one of the most devastating consequences of our troubled health care system industry–and one that barely receives mention. Innovation and entrepreneurship are what made this country great. Our health care system is destroying far more than our health; it’s wrecking our economy and global dominance.

Economists call this phenomenon “job lock,” and studies suggest that it keeps between 20 percent and 50 percent of workers from leaving their current jobs.

Because health insurance is tied to employment in the United States, workers who leave their jobs can see health bills skyrocket if they strike out on their own or take a position with a company that offers fewer benefits. Workers who would like to retire early stay on, unable to qualify for the government’s Medicare program until they turn 65.

As head of the National Federation of Independent Businesses, Todd Stottlemeyer frequently encountered would-be entrepreneurs who let their ideas go stale and their products languish on the workbench because they did not want to shoulder their own health care costs.


New Jersey saw a 14 to 20 percent rise in entrepreneurial activity due to a 1993 law making it easier for the self-employed to afford health insurance, a study by Philip DeCicca of McMaster University in Hamilton, Ontario found.

A major problem with most proposed solutions to rising health care costs and covering the uninsured is that there is little support for abandoning employer-based health insurance. The Democrats want to reduce costs and make insurance affordable for all. That’s great, but insurance companies ARE cost, and provide zero value. They make their money collecting premiums and denying care. Perhaps a public insurance option would give would-be entrepreneurs the security to leave their job and the health care benefits that went with it.

The Republicans have introduced a plan that would give each family a tax-credit to pay for insurance and remove incentives companies have had to provide health insurance to their workers. Perhaps these benefits could be converted to cash which would allow employees to shop around, thereby ending the problem of job lock.

Job lock is a real problem and should be a primary consideration in any health care discussion or proposal.

3 Replies to “Job Lock”

  1. Head of the National Federation of Independent Businesses, Todd Stottlemeyer, said in the article:

    “There are lots of factors that go into why somebody starts a business or doesn’t start a business: Do I have a good idea, do I have capital, do I have risk tolerance? Being able to get health insurance … should not be one of those determinant factors.”

    Exactly! Being tied to an employer in order to have affordable health care has long been a major problem. I think the Republicans are on the right track. I like your suggestion of converting the benefits to cash.

  2. @Kirsten Uhler – It isn’t my suggestion, it was in the article.

    I am not in favor of the Republicans’ plan. I favor a single-payer health care system which covers all Americans and promotes healthy living. I’d like to see the insurance and pharmaceutical industries disappear into oblivion.

    Socialism does not scare me. I like clean water and paved roads, just like everybody else. There isn’t a “market solution” to every problem.

  3. […] Job Lock Brent Danley, The Rhetoric, May 29, 2009 […]

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