# Distortion of the job market in the US due to linking healthcare to one's employer. **URL:** \ **Category:** Great Debates\ **Created:** [March 15, 2013, 2:46pm UTC](https://boards.straightdope.com/t/distortion-of-the-job-market-in-the-us-due-to-linking-healthcare-to-ones-employer/653006 "2013-03-15T14:46:55Z")\ **Posts on this page:** 11\ **Page:** 3
**Author:** ![BobLibDem](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/boblibdem/32/3149_2.png) [@BobLibDem](https://boards.straightdope.com/u/BobLibDem)\ **Post date:** [March 18, 2013, 3:32pm UTC](https://boards.straightdope.com/t/distortion-of-the-job-market-in-the-us-due-to-linking-healthcare-to-ones-employer/653006/41 "2013-03-18T15:32:11Z")
> [@puddleglum](#): > > This predates Obamacare. The previous law was that anyone who had health insurance continuously could not be denied because of a pre-existing condition. This doesn’t make sense. If you had health coverage continuously, how could you have a pre-existing condition? ---
**Author:** ![TriPolar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tripolar/32/3008_2.png) [@TriPolar](https://boards.straightdope.com/u/TriPolar)\ **Post date:** [March 18, 2013, 3:34pm UTC](https://boards.straightdope.com/t/distortion-of-the-job-market-in-the-us-due-to-linking-healthcare-to-ones-employer/653006/42 "2013-03-18T15:34:33Z")
> [@Voyager](#): > > So tax cuts for business are government interference now. Good to know. It’s not the tax cuts. The whole insurance structure we have comes from laws requiring companies to provide health insurance benefits for all full time employees in order to have those costs deducted as business expenses. Previously companies tended to provided health insurance benefits only to executives or select employees. This spurred the growth of the modern health insurance industry which makes it outrageously expensive to secure health insurance individually. It’s a sweet deal all around for everyone inside the system, benefits for employees that aren’t taxed, untaxed compensation for the employers to provide, and huge non-competitive market for the insurance companies. But for those outside the system there’s no incentive to provide reasonable healthcare costs. Even our emerging public healthcare system is dependent on the existing insurance providers. Even worse than being forced into a position of choosing between the current system and totally socialized healthcare, we have ended up with a merger of the two. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 18, 2013, 3:56pm UTC](https://boards.straightdope.com/t/distortion-of-the-job-market-in-the-us-due-to-linking-healthcare-to-ones-employer/653006/43 "2013-03-18T15:56:58Z")
> [@BobLibDem](#): > > This doesn’t make sense. If you had health coverage continuously, how could you have a pre-existing condition? When you switch providers. The law said that company programs could not reject people due to pre-existing conditions. If you were trying to buy insurance on your own, you were SOL. ---
**Author:** ![BobLibDem](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/boblibdem/32/3149_2.png) [@BobLibDem](https://boards.straightdope.com/u/BobLibDem)\ **Post date:** [March 18, 2013, 4:00pm UTC](https://boards.straightdope.com/t/distortion-of-the-job-market-in-the-us-due-to-linking-healthcare-to-ones-employer/653006/44 "2013-03-18T16:00:24Z")
> [@Voyager](#): > > When you switch providers. The law said that company programs could not reject people due to pre-existing conditions. If you were trying to buy insurance on your own, you were SOL. OK that makes sense, thanks. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 18, 2013, 4:00pm UTC](https://boards.straightdope.com/t/distortion-of-the-job-market-in-the-us-due-to-linking-healthcare-to-ones-employer/653006/45 "2013-03-18T16:00:59Z")
> [@TriPolar](#): > > It’s not the tax cuts. The whole insurance structure we have comes from laws requiring companies to provide health insurance benefits for all full time employees in order to have those costs deducted as business expenses. Previously companies tended to provided health insurance benefits only to executives or select employees. This spurred the growth of the modern health insurance industry which makes it outrageously expensive to secure health insurance individually. It’s a sweet deal all around for everyone inside the system, benefits for employees that aren’t taxed, untaxed compensation for the employers to provide, and huge non-competitive market for the insurance companies. But for those outside the system there’s no incentive to provide reasonable healthcare costs. The tax incentives are somewhat significant, but enough companies have not been providing coverage that it is hard to believe that they are critical. And I think that the massive expense for individual insurance comes more from lack of purchasing power of a single person and the expectation that those who buy want to buy individual coverage will be much more likely to need it. I have to buy into my company plan unless I can prove I’m covered elsewhere, so it is a mandate. ---
**Author:** ![Learjeff](https://avatars.discourse-cdn.com/v4/letter/l/94ad74/32.png) [@Learjeff](https://boards.straightdope.com/u/Learjeff)\ **Post date:** [March 18, 2013, 5:26pm UTC](https://boards.straightdope.com/t/distortion-of-the-job-market-in-the-us-due-to-linking-healthcare-to-ones-employer/653006/46 "2013-03-18T17:26:30Z")
> [@Grumman](#): > > … targeted tax cuts that create an artificial price differential between similar products are government interference. I’m not a libertarian, but I agree with this. I do believe in some exceptions (e.g., home mortgage deduction). But, explaining it away with “all tax cuts are targeted” isn’t much of an argument. > [@joebuck20](#): > > Not really. Another reason health insurance costs less through an employer is that they’re able to negotiate a group rate, which is often far less than what you’d pay for an individual plan on the open market. Also true. The tax differential isn’t the only reason. Fortunately, most self-employed can find _some_ group to get in with (e.g., belong to a credit union, find some work-related organization, etc.) Unfortunately, even with those groups, the cost is significantly higher than those paid by most employers. > [@puddleglum](#): > > This predates Obamacare. The previous law was that anyone who had health insurance continuously could not be denied because of a pre-existing condition. Yes, but only if you can afford to pay for coverage between jobs (which is exactly when you can’t afford coverage, and it’s when it’s the most expensive!) COBRA helps here, but only to an extent. BTW, I’m not sure how long that previous law was in effect, but it wasn’t in the late 80’s / early 90’s, when I was working for a startup, and pre-existing conditions were an issue even if you’d been covered previously. Glad to hear they fixed that. ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [March 18, 2013, 6:22pm UTC](https://boards.straightdope.com/t/distortion-of-the-job-market-in-the-us-due-to-linking-healthcare-to-ones-employer/653006/47 "2013-03-18T18:22:50Z")
> [@snowthx](#): > > Another aspect of the current arrangement here in the US is retirement and health care. With Medicare (our socialist medical safety net) not kicking-in until you are 65 years old, if you wanted to retire at the age of 60, you would need to budget bare minimum $2,000+ a month just to have health insurance on the open market as an individual policy holder, for 60 months. Ouch - that IS an impediment to freedom. > > Also, if you wanted to take some time off, or start a new business, the status and cost of your health insurance is a major concern (and constraint) here in the US, especially if you have a family. This is just one way the current hijacking of the American economy by the conservatives and the one percent actually hinders economic growth, by restricting the ability of members of the middle class to start new businesses. ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [March 18, 2013, 6:41pm UTC](https://boards.straightdope.com/t/distortion-of-the-job-market-in-the-us-due-to-linking-healthcare-to-ones-employer/653006/48 "2013-03-18T18:41:52Z")
My wife is currently working for an employer that offers health insurance, but she pays over a grand a month for it. Since her hours have been cut back, practically the only benefit she gets from working is health insurance, her salary is virtually nothing. Neither my son nor I are offered health insurance through our jobs, or we’d go with that, because my wife’s boss is one of those people whose manners are strictly situational, i.e., he treats his customers nicely but his is a complete asshole to his employees. My wife is looking for other work, so are my son and I, but so far, no luck. Horrible situations like my wife’s are more commonplace than you can imagine with our present system. It can be positively evil. It is in our case. ---
**Author:** ![Cliffy](https://avatars.discourse-cdn.com/v4/letter/c/59ef9b/32.png) [@Cliffy](https://boards.straightdope.com/u/Cliffy)\ **Post date:** [March 19, 2013, 4:45pm UTC](https://boards.straightdope.com/t/distortion-of-the-job-market-in-the-us-due-to-linking-healthcare-to-ones-employer/653006/49 "2013-03-19T16:45:40Z")
> [@puddleglum](#): > > This predates Obamacare. The previous law was that anyone who had health insurance continuously could not be denied because of a pre-existing condition. This is not correct. Under pre-Obamacare law (which is still effective until next year), someone whose pre-existing condition (“PXC,” for typing convenience) had been continually covered for some period of time (six months? I don’t remember) could not be denied coverage by a new employer’s _group_ plan. But if the person lost his job or decided to become self-employed and no longer had access to a group plan, insurance companies offering individual plans were free to refuse him coverage at any price, and most did. Pre-ACA, it was almost impossible for persons with most PXC’s to get individual insurance at any price. Starting next year, everyone will be able to purchase insurance on the open market no matter their health history, and so people will no longer be as thoroughly locked into their existing jobs. So while you are correct that pre-ACA law (specifically, The Health insurance Portability and Accountability Act of 1996) facilitates people with PXC’s moving from one employer that provides health insurance to another employer that provides it, it did nothing to address job lock amongst people who want to start or join a small business that doesn’t provide insurance, not to mention the dire circumstances for those who lose their jobs. (Those people have had access to continuation of their former employer’s insurance through COBRA, but it can be extremely expensive and doesn’t last forever.) The impact of the lessening of job lock for those with PXC’s is as yet unclear, although evidence suggests job lock is a serious impediment to economic growth. People with spouses whose companies provide family coverage are 25% more likely to start a small business than people who don’t have access to that kind of health care. Under Obamacare, this distinction will be ameliorated. (Moreover, small businesses will be given a tax credit to help them offer insurance, making it less risky to join one.) –Cliffy ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 19, 2013, 8:03pm UTC](https://boards.straightdope.com/t/distortion-of-the-job-market-in-the-us-due-to-linking-healthcare-to-ones-employer/653006/50 "2013-03-19T20:03:33Z")
> [@Cliffy](#): > > The impact of the lessening of job lock for those with PXC’s is as yet unclear, although evidence suggests job lock is a serious impediment to economic growth. People with spouses whose companies provide family coverage are 25% more likely to start a small business than people who don’t have access to that kind of health care. Under Obamacare, this distinction will be ameliorated. (Moreover, small businesses will be given a tax credit to help them offer insurance, making it less risky to join one.) > > –Cliffy Have a cite for the spouse coverage statistic? I totally believe it, but would like one if I reuse it. My wife can freelance (and thus files a Schedule C) because she is covered by my insurance. If she were not she’d probably have to find a job working for someone. ---
**Author:** ![Cliffy](https://avatars.discourse-cdn.com/v4/letter/c/59ef9b/32.png) [@Cliffy](https://boards.straightdope.com/u/Cliffy)\ **Post date:** [March 20, 2013, 4:32pm UTC](https://boards.straightdope.com/t/distortion-of-the-job-market-in-the-us-due-to-linking-healthcare-to-ones-employer/653006/51 "2013-03-20T16:32:11Z")
I don’t know where I found it. Jonathan Gruber alludes to it [here](http://www.washingtonmonthly.com/features/2009/0905.gruber.html). (He’s the guy who wrote Romneycare and consulted on Obamacare.) It’s a fuzzy number to be sure – some dispute the existence of job lock, in fact, but I don’t find them credible because the anecdotal evidence from every single person I’ve ever met is too strong to completely discount. –Cliffy [Previous page](https://boards.straightdope.com/t/distortion-of-the-job-market-in-the-us-due-to-linking-healthcare-to-ones-employer/653006.md?page=2)