Most Americans are covered by employer-sponsored health insurance, either through their own job or a family member’s. This can make it difficult to switch jobs- the new job might not offer insurance, or might have a worse insurance plan or network- locking people into their current job.
Economists have documented since at least the 1980’s how our insurance system seems to reduce job mobility. Several reforms have tried to improve the situation- COBRA, HIPAA, and most recently the Affordable Care Act.
In a paper published this week, Gregory Colman, Dhaval Dave and I evaluate how the extent of “job lock” has changed over time. In short, we find that job lock remains substantial and the Affordable Care Act doesn’t appear to have done anything to improve the situation. The paper has many tables of regression results, but the pictures tell the basic story:
The details differ a bit depending on which dataset and identification strategy we use, but a few things are clear:
- Macroeconomic factors are dominant in the short run; mobility falls during recessions like 2001 and 2007, then recovers.
- The long run trend has been toward lower job mobility for those with AND without employer-based insurance
- Those without employer-based insurance are still much more likely to switch jobs (we find 25-45% more likely)
- To the extent that this gap has closed since the year 2000, it has come through falling job mobility for those without employer-based insurance more than rising job mobility for those with employer-based insurance
Why does the Affordable Care Act appear not to have improved things? This remains unanswered, but we conclude the paper with some hypotheses:
In fact, our point estimates suggest that job lock actually got stronger following the ACA. One possible explanation for our finding is that the ACA’s individual mandate made insurance even more desirable by fining the uninsured. Another possibility is that workers continue to value employer-provided health insurance more over time as premiums continue to rise
Couldn’t another explanation for this be that jobs with benefits are better than jobs without benefits? Or do they control for total compensation or something?
It’s almost as if rising non-ESI premiums act as a “stealth raise” for ESI jobs. And it seems that ESI benefits are “stickier” than wages— companies would rather cut ESI benefits rather than upfront salaries, making it even tougher to leave your current job.