Monday, December 16, 2013

"Job Lock" From Employer-Based Benefits: What Should Government Do?

Back in 1993, the economists Jonathan Gruber and Brigitte C. Madrian highlighted the problem of “job lock”, a consequence of employer-based health benefits. Gruber and Madrian figured if people with a serious health problem left their jobs, they would be subject to medical underwriting and be charged high premiums or perhaps be denied coverage altogether if they entered the individual market. So they stay in their jobs to buy the insurance their employers provide.

However, the problem was reduced by HIPAA, a 1996 federal law which required employers to offer benefits to new employees on the same term as incumbent employees, without medical underwriting, if the new employees had previous long-term coverage without a significant lapse.

Yet, one justification for ObamaCare is that it will end this (perhaps non-existent) job lock. There is a better way.

Read the entire article at John Goodman's Health Policy Blog or the Independent Institute's Beacon blog.

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