Eight Months Until the End of Job Lock

For years, even before Barack Obama was elected, one of the many complaints liberals (mostly) had about the current employer-based health insurance system was "job lock"—if you have insurance at your job, particularly if you or someone in your family has health issues, then you're going to be hesitant to leave that job. You won't start your own business, or join somebody else's struggling startup (unless they provide insurance), and this constrains people's opportunities and dampens the country's entrepreneurial spirit.

That this occurs is intuitively obvious—you probably know someone who has experienced it, or have experienced it yourself. And today there's an article in that pro-Democrat hippie rag The Wall Street Journal entitled "Will Health-Care Law Beget Entrepreneurs?" Amid the worrying about the implementation of Obamacare in January, and the quite reasonable concern that the news could be filled with stories of confusion, missteps, and dirtbags like that Papa John's guy cutting employees' hours rather than give them insurance, to avoid the horror of increasing the cost of a pizza by a dime,11This is important: when you hear a story about an employer who cut his employees' hours so he wouldn't have to abide by the law, what you're reading about is a jerk who doesn't want to offer his employees insurance, not some inevitable consequence of the law. That's a choice he makes. And don't forget too that the employer mandate only applies to companies with 50 or more employers, and 96 percent of them already offer health insurance, even without a mandate. it's a reminder that there will probably be lots of stories like this one in the news too, stories about people whose lives have been changed for the better by the fact that Americans will have something they've never had before: health security.

So what kind of effect could the elimination of job lock have on the economy? That's tough to say. The study referred to in the WSJ article finds that people are much more likely to start a business if they get their health insurance from their spouse's job than if they get it from their own job; in the former case you'd still have insurance if you started a business, while in the latter case you'd lose it. In addition, and this is particularly interesting, even though you might think of 65-year-olds as looking forward to days of golf and eating dinner at 4 p.m., a large number of people seem to start businesses pretty much the minute they become eligible for Medicare. While it's hard to get insurance in the current private market if you're 44, it's basically impossible if you're 64.

So it seems that the fact that after January, job lock will be history means that more businesses will be started. How many more? Well, we don't know yet, and it could depend in part on how affordable the insurance you can get through the exchanges is compared to what people are getting from their employers. And it will be hard to measure precisely how much more economic activity is generated by businesses that wouldn't have otherwise been started. Obviously, some will succeed and more will fail.

Nevertheless, beyond additions to GDP, there's something psychological that shouldn't be discounted, touchy-feely though it might be. The end of job lock means the end of a certain kind of fear that all of us under the age of 65 live with to one degree or another. It's the fear that leaving a job, voluntarily or otherwise, could become an utter financial calamity if we or one of our loved ones has a health problem. Even if you wish reform hadn't been grafted on to the existing employer-based system (I'll raise my hand on that one), ending that fear is huge; it's one of the best things Obamacare does. Even if it's difficult to communicate on a bumper sticker.

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