I think you’re underestimating the number of people out there who would be interested in working part time, or starting up their own business, or retiring early, or quitting the job area completely for a while to deal with family issues (such as child care or elder care). When health insurance is tied to full-time employment, it’s often very difficult to make those sort of arrangements work, because the cost of private insurance is simply prohibitive.
Extend the same tax deduction to non-employer sponsored health insurance.
I’m not underestimating it at all. I simply said it was probably less of an impediment than the OP thinks (and the OP specifically mentioned changing jobs, not leaving the workforce entirely) Still might be a huge impediment for some people, but none at all for others. For example, health insurance is not what keeps my husband from working part-time or from starting his own business- the health insurance comes from my job not his. And even if health insurance wasn’t tied to employment , I still couldn’t stop working entirely or work part-time because along with the health insurance, my job also provides a defined-benefit pension and it would be foolish for me to stop participating in the pension before I retire. So in my household, insurance tied to full-time employment has no effect on job mobility.
There will also be no negative effect on job mobility for those whose employers don't offer health-insurance or who can't afford their employer's offerings. If I don't have insurance through employer A, then insurance being tied to employment is not going to prevent me from taking a job with employer B. And this group is probably the largest group of all- if I remember correctly , only about 50% of Americans have health insurance through an employer and about 25% of non-retired adults have no coverage at all.
That doesn’t mean I think insurance tied to employment is a good idea- it’s not. But that’s a different issue than whether millions of hours are wasted while people compare the potential new job’s coverage to the old. For far too many people , the comparison is very quick- they won’t have coverage at either job.
Back when I was in grad school, before 401Ks, defined benefit pensions were universal in engineering, One big topic of conversation was the “portable pension” which someone could take with him when he switched jobs. Now we have them, and they have really helped in fostering startups, because someone can switch companies without losing any retirement money at all.
My wife can be a freelancer because she is covered by my health care. In the old days she’d have basically no tax advantaged retirement savings except Social Security. Now she has a SEP. We’re never going to get divorced, but don’t you think it is wrong that someone in her position (or your husband’s) who did get divorced would have an immediate healthcare problem?
Now healthcare pretty much always covers families, so assuming you can switch to another job with good healthcare, you’d be okay. But given pension vesting times, I think your mobility is decreased - where it wouldn’t be if you had a 401K.
I left a job in a year and a quarter. If it had a pension, I’d get nothing, but since it had a 401K I lost nothing.
I agree that 401Ks have problems, but mobility is a big plus for them.
If it makes you feel any better I’ve seen this exact same scenario(perhaps not so serious) in numerous countries, for whatever strange human psych reason people will stick with a broken system rather than start fresh.
There was a very effective effort in the last quarter of the 20th C to cleave off people’s identity from their work to all sorts of disposable masks that were market-driven. Business, media and to some extent (when they were relevant at all) politics were all compromised by the same shallow yet comforting narratives (it’s not your fault that mass numbers fall into poverty…), mostly because the people working in them were sheltered and fretted at personal tragedies about which they knew nothing. These people – nearly every one of them a good and intelligent person-- created their own well-designed rationalizations to conclude it really was not their fault.
I do. That’s why I said I don’t think insurance tied to employment is a good idea.But that’s a separate issue from whether it decreases mobility or the extent of that decrease.
My point was that my mobility is decreased by something other than healthcare and that would still be the case even if healthcare weren’t tied to employment. In my case now, it’s the pension.In another job I had when I was younger it would have been the very long child-care leave (unpaid, but three years long). For someone else, it might be annual leave.
BTW, even people with pensions can have the 401Ks or the equivalent. (mine is a 457 ).I’m not tied to the pension because I’ll get nothing if I change jobs. I’m tied to the pension because I can’t contribute enough to the 457 plan to even have a chance at the same benefit (I’ll get 60% of my salary if I retire after 55 with 30 years of service)
If not job mobility, then spousal mobility!
Definitely there are other mobility issues. But pensions tied to an employer back then had a similar effect as healthcare tied to an employer now.
I agree that pensions have their pluses. Portable transferable pensions with immediate vesting would have been another solution.
Here’s an example of the impact of healthcare. My daughter is a grad student, and her husband is a lawyer in private practice. She got a fellowship for next year but is waiting to see if she gets a two year TA instead, because that comes with healthcare for him and the fellowship doesn’t. I know lots of people who enroll their kids in community college and don’t care if they don’t really attend because it keeps them on their healthcare as students, and that saves them more money than community college costs. It means the kids can’t move to someplace where they could get a job more easily. It is a big mess.
The Affordable Care Act already solved that problem. For plan years beginning after September 2010, plans that cover dependents must cover both married and unmarried adult children until age 26, regardless of student status or residence. There’s an exception for plans in effect before March 2010- they don’t have to offer coverage to adult children eligible for a plan from their own employer until 2014. Which I mostly know because without ACA, both of my kids would have lost their coverage in 2011 since they were no longer full-time students
We already do. It’s called “giving to charity.”
Anyhow–why in the world would libertarians be upset by our (formerly) current model? As long as health insurance is not mandated in any way, having it tied to a person’s job is sort of the opposite of government interference.
Government interference is what ties insurance to employment.
Because government interference is the only reason it is tied to a person’s job. If you’re making $40,000 a year, non-employer sponsored health insurance costs 33% more than an identical health insurance plan paid for directly by your employer, just because of income tax.
One of the many benefits of ACA - which also improves job mobility by letting us with pre-existing conditions have a chance of getting insurance if we are without jobs or change jobs into one without insurance.
So tax cuts for business are government interference now. Good to know.
Do you think your inability to understand anything larger than a soundbyte is endearing? No, what I said is that targeted tax cuts that create an artificial price differential between similar products are government interference.
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.
Most of our tax cuts are targeted - even general ones, which target different income groups differently. So calling this government interference, while true, isn’t very interesting - and government interference in this sense is supported by both parties.
There were many distortions from that era, but only the health care one remains. Perhaps that was because with the rejection of that evil socialized medicine it was perhaps the best solution? Especially when it was relatively cheap.
Plus employer based plans have no pre-existing condition rules, and the ones I’ve been in have had a lot less random rejection of payments. In fact pretty much every problem we’ve had has been the doctor miscoding something
But basic economics tells you that mass buying power gets you lower prices than individual purchases. And it explains why the bigger the company the better the deal.
I can’t possibly move companies owing to the insurance. I work for a company with probably the best Autism insurance in corporate America, and that’s a HUGE benefit.
This predates Obamacare. The previous law was that anyone who had health insurance continuously could not be denied because of a pre-existing condition.
One nice thing about the private insurance market was that you can customize your coverage. When I was younger I purchased a high deductible policy with better coverage for accidents. It was very affordable. The first job I had that offered insurance as a benefit had a much more better policy than I needed, but the tax difference was such that it made financial sense to purchase the more expensive policy that fit the older people who selected the company’s insurance.