Will Work For Health Insurance: The 'Job Lock' Conundrum
Richard Polonsky is an organizational consultant, and can, if prompted, easily talk like one.
“Being an outsider to an organization, I think people tend to listen to you more than when you are part of the organizational structure,” says Polonsky.
Based in Bedford, he has spent a career advising companies and non-profits on big campaigns. It’s a role Polonsky excels in: working from the outside, thinking strategically, and being blunt with management.
But as an independent contractor, he never received the same health benefits employees could access.
“Usually I just paid for it on my own, but it was, like, $1,200 a month, and my income was pretty spotty,” says Polonsky.
He’s now 68, old enough to qualify for Medicare. But his wife is younger, and her part-time job doesn’t provide health insurance.
Getting her coverage is pushing Polonsky back into the workforce, and away from freelance consulting.
“It is an incredible conundrum for me, and I’m sure, many others, that I have to be seeking a job based on the quality of health insurance that I might get,” says Polonsky.
The Accidental System
So, how did Polonsky get here? How did we all get here? Where our health care, and the health care of our families, became so dependent on our jobs?
“The whole system of employer-sponsored insurance really sort of came about by accident,” says Julie Sonier, a health policy researcher at the University of Minnesota.
The accident she’s referring to came about during World War II, when the federal government imposed wage controls at the same time the country faced a labor shortage.
Hungry for workers, American companies enticed talent with benefits, instead of salary. The IRS green-lighted the practice by giving benefits favorable tax treatment.
Sonier says this system of employer-based coverage actually worked pretty well.
In fact, her research finds that a decade ago, 81% of people under age 65 in New Hampshire were covered through the workplace.
But that’s now starting to fade.
“Certainly, the recession that started in 2008 has played a role, and accelerated that change,” says Sonier.
Post-recession, that number is now at 74%, still the highest in the country, but it’s trending down. And it’s small businesses in New Hampshire that are cutting back the most on health benefits.
That hurts those firms, because they can’t attract the best employees. And it also hurts workers who can’t move as freely around the economy.
Picking The Job Lock
There’s a theory that describes a worker’s inability to pursue other passions: job lock.
“Job lock is when employees are unable to leave a current position, when they want to, in order to go chase their dreams,” says Seth Goodall, who runs the U.S. Small Business Administration’s New England region.
“If we can make health insurance more affordable, then that individual may have that opportunity to chase their dreams and start their own business.”
Chasing dreams, or what an economist might call ‘the mobility of labor,’ is a good thing: you want people to be able to work for any company, or start their own enterprise.
Goodall says the Affordable Care Act encourages this freedom. He points to one study that estimates as many as 1.5 million people nationally, and 7,000 in New Hampshire, will take advantage of cheaper health insurance opportunities through the ACA and start their own business.
John Holahan, a researcher with the DC-based Urban Institute, says the availability of cheaper individual policies could decrease job lock, eventually.
“I think it will,” says Holahan. “It has to obviously get implemented, and that is off to a pretty rocky start.”
But Holahan cautions the health law doesn’t fundamentally alter the employer-based system of insurance coverage.
“And even with the ACA, I mean, it is not being changed. The ACA is largely filling in the gaps around that system.”
And it’s that employer-based system that many workers still strive for.
Like Bedford consultant Richard Polonsky, who hopes to find a way to insure his wife.
“That’s why I’m hoping the Affordable Care Act will provide that,” says Polonsky. “But, in the interim, I’m looking for a job primarily so that I will get the health benefit.”