According to a survey of 1,400 adults conducted by YouGov for Policygenius, an online insurance marketplace, 33% of workers (both part- and full-time) who get health insurance through their employer would be very or somewhat likely to quit if that weren’t the case.
Further, the survey found 26% of Americans with health insurance would start their own company if health insurance wasn’t a factor.
This points to the two sides of employer-sponsored healthcare. On the one hand, nearly a century after the benefit was introduced, it’s still effective in retaining workers, even in the middle of a record quitting trend. On the other, it prevents job mobility and entrepreneurship, both features that benefit the US economy.
The dangers of the job lock
Employer-sponsored health insurance is a unique feature of American workplaces. All other wealthy countries have some form of government healthcare, and while in some cases private workplaces might offer supplemental health benefits to their workers, the US stands out as the only place where a majority of employees rely on their employer for primary healthcare coverage.
Although this has helped employers retain workers, it also has become an increasingly expensive way to do so, as the cost of healthcare coverage increases faster than inflation. Still, while employees might find it helpful, there are known negative consequences to what is known as the “job lock,” or the reduced mobility from jobs that offer health insurance. A connected phenomenon is the “entrepreneurship lock,” where employees who would like to leave their current position to start a business are afraid of doing so for fear of not being able to afford coverage.
On the contrary, making healthcare benefits available independently of employment can promote entrepreneurship. In 2016, a Harvard Business School study looked at the impact of the 1997 Child Health Insurance Program—which offers free healthcare coverage to children in families that don’t qualify for Medicaid but don’t have health insurance. The study showed that it increased self-employment by 12%, because parents were no longer concerned about losing coverage for their kids, and could take the risk of starting a business.
Similarly, another study found that rates of entrepreneurship go up as people turn 65, when they qualify for Medicare and can take the risk of not having employee-sponsored care.
Who is afraid of losing health insurance?
Policy interventions such as 1985’s Consolidated Omnibus Budget Reconciliation Act, or COBRA (which allows workers to pay into their existing healthcare plan after they leave an employer) , the Health Insurance Portability and Accountability Act in 1997, and the Affordable Care Act (ACA), have had only marginal effects on the job lock.
Policygenius’s survey found that younger workers, aged 18 to 34, were the most likely to leave their job if healthcare wasn’t a factor, and 40% of them said they would do so. But Hanna Horvath, a health insurance expert at Policygenius, said this might not indicate that younger people are more concerned about losing their insurance coverage, but , rather, that they might not know what other options are available.
More than 60% of those who responded to the survey, for instance, don’t know whether they can get government subsidies to purchase individual plans on the ACA marketplace or for how long they can get coverage through short-term coverage plans (which are typically less expensive than full health insurance but cover a smaller range of services).