Health Insurance job lock

June 9th, 2008 | by Brian Schwartz |

An article in Business Week describes it well:

Held Hostage By Health Care
Fear of losing coverage keeps people at jobs where they’re not their most productive

With the democrats ascendant, the political climate is ripe for another push for universal medical coverage. Kelly Services Inc. Chief Executive Carl T. Camden, a proponent of fixing health care once and for all, is taking advantage of the opportunity by rolling out new rhetorical ammunition. Workers, he says, are increasingly shackled to their jobs for no reason other than to cling to their employers’ health insurance coverage. These are people, he says, “who don’t leave a job even though they’re unhappy and would be more productive somewhere else.”

Economists and academics call this phenomenon “job lock.” Studies say it could reduce job mobility by up to 25%, according to Brigitte Madrian, a public policy and corporate management professor at Harvard University’s John F. Kennedy School of Government. A fluid labor market is viewed as a prime driver of U.S. economic growth relative to other industrialized countries.

Job lock creates friction by artificially tethering people to their jobs. …

And so many workers will keep hanging on to jobs they hate. One single mom in New York, for example, is sticking with her graphic design job solely to retain the health coverage for herself and her son. Half her pay goes toward her share of the monthly premium. Her wish? To start a business doing bath and body products. “I feel stuck,” she says.

After a decade of working in a job she wanted to leave, Holmes Johnson found the courage to move on. “Starting my own thing was too overwhelming, and my husband’s plan did not offer the coverage to make us feel secure,” she says. A few months ago, she landed a public-relations position with a comparable salary at Washington law firm Sterne Kessler Goldstein Fox. After checking the firm’s formula for prescription-drug coverage, she made the jump. In what other country, she wonders, would that be the deciding factor

 McCain’s health plan, would remedy this, even though it could be better.

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  • kmw
    There was a point where I stayed at a job that I really disliked and was bored to death with solely because of the health insurance coverage. I was in IT during the time it was a super hot commodity. I had some good specializations and was getting at least 2-3 calls a week from recruiters and even companies directly trying to hire me away. None of them offered psych coverage with their health plans, however.

    I had a child who developed severe panic disorder upon entering puberty. She needed expensive drugs and weekly therapy with a psychologist for several years. They had her on Prozac and she developed the severe depression/suicidal symptoms from that (this was back before it was known that Prozac could have that effect on teens). She ended up doing a few stints in the psych hospital. The place I was working had pretty decent coverage for that.

    Even with relatively decent coverage for the time, I still ended up paying about $15k out of pocket over a 2-3 year period for the 2 or 3 psych hospital stays. If I'd taken any of the other job offers, I might have been happier with work, but I'd have ended up having to declare bankruptcy because of my child's medical problems.
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