Job Lock and Employer-Provided Health Insurance: Evidence from the Literature

This report, written by Dean Baker at the Center for Economic and Policy Research, reviews the research literature on health insurance-related “job lock”—a labor market pattern that occurs when workers are reluctant to leave a job that offers health insurance because they cannot otherwise obtain affordable insurance. Based on the research, the author concludes that the Affordable Care Act’s insurance market reforms should have substantial, positive labor market effects.

The report reviews the research on three types of job lock:

• Workers remaining in jobs in which they are not satisfied because of the fear of not being able to get health insurance at a new job (or not being able to buy or afford it in the individual market);
  
• Workers being reluctant to start a business because they do not want to lose employer-provided health insurance; and
  
• Workers staying employed (or employed full time) in order to obtain employer-sponsored insurance, when they would otherwise prefer to retire or work part time.

All three types of job lock are likely to be reduced by the Affordable Care Act, resulting in important gains for workers, families, and the economy.