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GAO-12-166R: 

United States Government Accountability Office: 
Washington, DC 20548: 

December 15, 2011: 

The Honorable Harry Reid:
Majority Leader:
United States Senate: 

The Honorable Max Baucus:
Chairman:
Committee on Finance:
United States Senate: 

The Honorable Tom Harkin:
Chairman:
Committee on Health, Education, Labor and Pensions:
United States Senate: 

Subject: Health Care Coverage: Job Lock and the Potential Impact of 
the Patient Protection and Affordable Care Act: 

The majority of Americans--about 55 percent in 2010--rely on employer-
sponsored health care coverage, which is largely subsidized by most 
employers and thus less costly to employees than coverage purchased by 
individuals on their own.[Footnote 1] Although a valued employee 
benefit, many believe that having health coverage tied to employment 
can influence workers to stay in jobs they might otherwise leave, a 
phenomenon generally known as "job lock." The Patient Protection and 
Affordable Care Act (PPACA), enacted in 2010,[Footnote 2] includes 
provisions that are designed to increase the accessibility and 
affordability of health coverage, particularly for individuals with 
preexisting health conditions. PPACA implementation is phased; though 
some provisions went into effect during the year of enactment, many 
provisions are scheduled to take effect in 2014. Some suggest that one 
benefit of PPACA may be a decrease in the occurrence of job lock. You 
asked us to examine job lock and the specific ways PPACA may affect 
it. Accordingly, we examined two key questions: 

1. What has research shown about whether and the extent to which 
workers stay in jobs they might otherwise leave out of fear of losing 
health care coverage and the impact of those decisions on the labor 
market? 

2. What are expert views on the ability of PPACA to mitigate job lock? 

To answer the first question, we conducted a systematic literature 
review of articles published in the United States in the last 10 
years. We included studies published in a journal with a peer review 
process or by an independent research organization. To be included in 
our review, studies must have had empirically-based findings on 
whether or the extent to which employer-sponsored health coverage 
influences workers' decisions to stay in a job and/or the impact of 
these decisions on the national economy or labor market.[Footnote 3] 
In addition, we reviewed the studies for methodological soundness for 
the purposes of our report.[Footnote 4] We identified 31 studies that 
met our criteria. (See enclosure I for these studies). 

To answer the second question, we reviewed published summaries of the 
law[Footnote 5] and obtained input from the Department of Health and 
Human Services and the Congressional Research Service to initially 
identify potential areas of impact of PPACA, how those potential areas 
of impact, if realized, could affect job lock, and the specific PPACA 
provisions most likely to influence job lock.[Footnote 6] We then used 
this information as a basis for discussions with multiple experts that 
conduct research and analysis on health coverage and labor market 
issues, including organizations that represent key health care reform 
stakeholders and a range of perspectives. (See enclosure II for a list 
of the experts we interviewed.) During these interviews, we solicited 
views on the potential of PPACA to affect job lock overall and the 
role specific provisions of the law may play. The goal of the 
interviews was to assess expert views on the potential of PPACA to 
affect job lock; we did not attempt to more generally assess the labor 
market or other economic implications of the law. A list of the 
specific provisions in PPACA identified through this methodology as 
potentially affecting job lock is found in enclosure III. The views 
presented are not those of GAO and are not necessarily shared by all 
the experts we interviewed, nor by the organizations that the experts 
represent. 

We conducted this performance audit from May 2011 through December 
2011 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

Background: 

Economic theory generally suggests that worker mobility--workers' 
ability to move between jobs or in and out of the labor market--
enables workers to obtain employment where they are most productive, 
which in turn promotes efficiencies in the labor market and provides 
benefits to the overall economy. Worker mobility can be affected by 
numerous factors, including wages offered and job availability, 
education and career interests, personal priorities and family 
situations, or the value that individuals place on benefits provided 
by different employers. Health coverage provided by a worker's 
employer can be one factor in such mobility decisions. "Job lock" is 
the term used to describe the concept of workers staying in jobs they 
might otherwise leave for fear of losing access to affordable health 
coverage. By definition, job lock, to the extent that it exists, is 
considered a negative phenomenon for an individual worker because it 
keeps them from making their preferred labor mobility choice, such as 
to change jobs, start a business, reduce work hours, or exit the labor 
force to stay home with children or retire. 

A majority of Americans rely on private insurance for health care 
coverage. This includes employer-sponsored coverage as well as 
coverage purchased directly by individuals. In 2010, 55 percent of 
Americans received health coverage through employer-sponsored group 
health plans purchased or funded by their employers and an additional 
10 percent of Americans received coverage through health coverage 
purchased directly from health issuers in the individual market. 
[Footnote 7] Employers offer health coverage in part as a benefit to 
attract employees and most employees participate in employer-sponsored 
coverage when it is available.[Footnote 8] Compared to large 
employers, small employers are less likely to offer their employees 
health coverage, citing the cost of coverage as a key reason.[Footnote 
9] Group and individual market coverage differ in several ways, 
including how premiums are calculated and whether application denials 
are permitted. For example, while premiums for employer-sponsored 
coverage are not permitted under federal law to vary for similarly 
situated employees based on health status,[Footnote 10] premiums for 
individual health coverage in many states usually do depend on this 
factor and may thus vary substantially from individual to individual. 
Furthermore, employers generally subsidize the majority--more than 70 
percent on average in 2011--of the premium costs,[Footnote 11] while 
those with individual market coverage are responsible for the full 
cost of premiums. As a result, the employee share of premiums for 
employer-sponsored coverage tends to be less costly than overall 
premiums for individual market coverage. Group and individual market 
coverage also differs with respect to application denials. Under 
federal law, individuals enrolling in group health plans are protected 
from being denied enrollment because of their health status.[Footnote 
12] However, currently in the individual market of many states, some 
individuals who apply for health coverage can have their applications 
denied for eligibility reasons or as a result of their health status, 
such as having a preexisting health condition.[Footnote 13] 

PPACA contains a number of provisions that may make health coverage 
more accessible and affordable, as well as encourage employers to 
offer health coverage. Regarding access, for example, PPACA reforms 
the individual health insurance market in 2014 by prohibiting issuers 
from denying coverage due to health status, and by establishing 
Affordable Insurance Exchanges in states through which individuals can 
compare and select standardized health coverage offered by 
participating issuers.[Footnote 14] Regarding affordability, PPACA 
expands Medicaid eligibility, establishes tax credits and cost-sharing 
reductions for coverage in the new: 

Affordable Insurance Exchanges, and prohibits issuers from charging 
higher premiums because of preexisting conditions or medical history. 
[Footnote 15],[Footnote 16] PPACA also contains provisions that may 
encourage employers to offer health coverage, including (1) tax 
credits for small businesses beginning in 2010, (2) financial 
penalties for applicable large employers who do not offer minimum 
essential coverage and have at least one full-time employee receiving 
a premium tax credit in an Exchange plan starting in 2014, (3) the 
establishment of small business Exchanges in 2014 that small 
businesses can use to purchase health coverage, and (4) the 
requirement that individuals--subject to certain exceptions--obtain 
health coverage or pay a financial penalty. (See enclosure III for 
more details on PPACA provisions that may affect job lock). 

Results in Brief: 

Empirical research generally indicates that certain types of workers 
are more likely to remain in jobs they would otherwise leave in order 
to keep their employer-sponsored health care coverage, although 
research does not allow for a definitive answer on the prevalence or 
implications of this phenomenon for the overall labor market. The 
studies we reviewed generally found those workers who rely on their 
employer-sponsored health benefits are less likely to change jobs, 
leave the labor market, become self-employed, or retire when eligible, 
compared to those who have access to alternative sources of coverage. 
For example, one study found men with employer coverage were about 23 
percent less likely to leave a job compared to those who also had 
access to coverage through a spouse.[Footnote 17] In addition, some 
research found that this job lock phenomenon may be particularly acute 
for individuals with certain preexisting health conditions. However, 
because the study results and approaches used differ widely, it is 
difficult to quantify the overall prevalence of job lock based on 
those results. For example, the research examines a wide range of 
different populations and uses various definitions of job lock. 
Regarding labor market impact, the research we reviewed provides 
little empirical basis for assessing the aggregate labor market 
implications of job lock. This may not be surprising given the 
difficulty of designing research to address the variant ways job lock 
can affect different populations and account for the direct and 
indirect ways job lock could affect the labor market and economy. 

The experts we interviewed generally agreed that expanded access to 
health coverage under PPACA may help mitigate job lock, but had 
differing views or were less certain about other possible effects of 
the law on job lock. They generally agreed that to the extent that 
PPACA expands access to health coverage for certain individuals, it 
may help mitigate job lock. This access may help mitigate job lock for 
individuals who leave employer-sponsored coverage and seek coverage in 
the individual market--particularly for those with preexisting health 
conditions. Many experts cited specific PPACA provisions related to 
expanded access that had potential to mitigate job lock, such as 
select PPACA insurance market reforms which will require health plans 
offering group and individual coverage to accept applicants regardless 
of health status and the establishment of Affordable Insurance 
Exchanges. Regarding other possible effects of the law, experts 
generally agreed that PPACA's impact on premiums and employer 
willingness to offer coverage had job lock implications, but were less 
certain of or had differing views about whether PPACA would decrease 
premiums or encourage more employers to offer coverage, and thus were 
less certain about their likely impact on job lock. 

Research Suggests Workers Are More Likely to Stay in Jobs Due to Their 
Employer-Sponsored Health Coverage, yet Prevalence and Labor Market 
Impact Are Uncertain: 

Employer-Sponsored Health Coverage Can Influence Workers to Remain in 
Jobs They Might Otherwise Leave: 

Studies published in the last 10 years generally indicate that 
employer-sponsored coverage can influence certain workers to remain in 
jobs they might otherwise leave. Of the 31 studies we reviewed, 29 
presented evidence consistent with job-lock.[Footnote 18] While their 
estimates of job lock varied, studies generally found that workers 
with employer-sponsored coverage are less likely to change jobs, 
become self-employed, exit the labor market or retire than workers who 
are not dependent on their employer for coverage (see enclosure I for 
key findings from the studies we reviewed).[Footnote 19] Workers not 
dependent upon their employment for coverage would include those with 
coverage through a spouse, or access to public insurance or retiree 
health coverage. Multiple studies found married individuals who relied 
on their own employer-sponsored health coverage were less likely to 
leave a job compared to those who had alternative access to health 
care through their spouse. For example, one study found men with 
employer coverage were about 23 percent less likely to leave a job 
compared to those who also had access to coverage through a 
spouse.[Footnote 20] Other studies found workers without access to 
public coverage were less likely to leave a job than those who had 
such coverage. For instance, one study found that low-income fathers 
with employer-sponsored coverage were 5 to 6 percent less likely to 
leave their job before their children became eligible for public 
coverage under the State Children's Health Insurance Program (SCHIP). 
[Footnote 21] Finally, several studies also found older workers 
nearing retirement age were less likely to retire before the age of 65 
if they lacked retiree health coverage.[Footnote 22] For example, one 
study found workers who had retiree health benefits were 29 to 55 
percent more likely to retire than those who did not.[Footnote 23] 

In addition, a subset of the research looked at job lock among workers 
with health conditions. These studies consistently found that after a 
health diagnosis, workers with employer-sponsored coverage were less 
likely to leave a job or reduce their hours compared to workers who 
were not reliant on their employer for health coverage. One study 
found with a newly diagnosed illness, men with employer-sponsored 
coverage had a 20 percent higher probability of staying in a job 
compared to men who have coverage through a spouse.[Footnote 24] 
Another found employer coverage reduced the propensity of individuals 
with chronic illness to quit by 41 percent for men and 39 percent for 
women compared to those who do not rely on their employer for 
coverage.[Footnote 25] Findings from a few studies also suggest that 
job lock may be more acute for people with health conditions. For 
example, one study found that while workers with employer-sponsored 
health coverage were less likely than those without employer coverage 
to leave the labor force, reduce hours, or change jobs, these 
differences were particularly striking for cancer survivors.[Footnote 
26] 

The Overall Prevalence and Labor Market Impact of Workers Staying in 
Jobs Due to the Employer-Sponsored Health Coverage Is Unclear Due to a 
Variety of Factors: 

While the research may be helpful in confirming the presence of job 
lock, it is less helpful in illustrating the overall prevalence or 
labor market impact of job lock. Because the study results and 
approaches used differ widely, it is difficult to quantify the overall 
prevalence of job lock based on those results. For example, even 
though the studies controlled for key factors that could influence 
workers' decisions regarding whether to stay or leave a job, the 
variation in the job lock estimates reported in the individual studies 
indicate that such decisions will differ depending on the 
characteristics of the population studied. Such differences make it 
difficult to estimate how job lock would manifest itself on an 
aggregate level. Additionally, the differences in approaches used mean 
the findings may not be comparable or generalizable, and therefore do 
not lend themselves to definitive conclusions about the overall 
prevalence of job lock. For example, the studies use several different 
national datasets, as well as city-based datasets, or surveys 
conducted to collect specific data.[Footnote 27] Likewise, the study 
populations vary widely, ranging from women newly diagnosed with 
breast cancer, to low-income working fathers, to U.S. taxpayers. 
Furthermore, studies use various definitions and variables to measure 
the job lock phenomenon, such as job tenure or job separation. Yet 
others use a change in state or federal law, such as health care 
reforms or public assistance programs, as an indicator of alternative 
health care coverage to measure the existence of job lock. Such 
differences in approaches across the studies we reviewed may explain 
the wide variation in the key findings and estimates identified by 
these studies (as presented in enclosure I). 

Secondly, because the studies draw on data from different decades, 
spanning from the 1980s to 2008, it is not clear the extent to which 
their findings reflect how legislative or economic changes during this 
time span may have affected the prevalence of job lock. On the one 
hand, certain events may have reduced job lock. For example, the 
Health Insurance Portability and Accountability Act of 1996[Footnote 
28] set new minimum standards for portability of health coverage and 
may have increased workers' willingness to change jobs by prohibiting 
employers from excluding eligible employees from participation in the 
health plan and by restricting the ability to impose waiting periods 
for coverage of preexisting health conditions. Additionally, the 
decline in employer-sponsored health coverage over time may have 
weakened the link between employment and health benefits for some 
individuals, thereby reducing workers' hesitance to leave their jobs. 
On the other hand, other events may have led to an increased incidence 
of job lock. For example, the dramatic increases in the cost of health 
care coverage over the last decade may have made workers less willing 
to leave jobs that provide coverage. In general, economic downturns 
may make it harder to distinguish the impact of the provision of 
health coverage from other factors that keep people in their jobs, 
such as fewer available jobs and the need to provide income in a 
family where a spouse has lost their job. 

Finally, while economic theory generally suggests that reduced labor 
market mobility (such as that caused by job lock) can decrease 
potential gains in productivity and income, and adversely affect 
worker satisfaction,[Footnote 29] the research we reviewed provides 
little empirical basis for assessing the aggregate labor market impact 
of job lock.[Footnote 30] This may not be surprising given the 
difficulty of designing research to address the variant ways job lock 
can affect different populations and account for the direct and 
indirect ways job lock could affect the labor market and economy. A 
few of the studies, while not generalizable, provided a glimpse of 
some of the ways in which job lock can directly influence the labor 
market. For instance, one study found that men with family health 
problems and employer coverage, but no spousal coverage, were one-
third less likely to start a business compared to all men with 
employer coverage in the study sample.[Footnote 31] Another study 
projected that labor force participation would be greater (74.5 
percent) for men aged 55 to 59 without retiree coverage than for men 
with retiree coverage (65.8 percent).[Footnote 32] However, these 
studies did not attempt to explore the more indirect or aggregate 
impact of job lock on the labor market, such as the effect of these 
actions on job growth or productivity. 

Experts Generally Agreed That Expanded Access to Health Coverage under 
PPACA May Mitigate Job Lock, but Had Differing Views or Were Less 
Certain about Other Possible Effects of the Law on Job Lock: 

Expanded Access to Health Coverage for Workers with Preexisting Health 
Conditions under PPACA Could Help Mitigate Job Lock: 

The experts we interviewed generally agreed that to the extent PPACA 
expands access to health coverage for certain individuals, it may help 
mitigate job lock.[Footnote 33] In 2014, PPACA will provide broad 
access to individual market coverage at premium rates that may not 
vary based on the health status of an applicant. This access may help 
mitigate job lock for workers leaving their employer-sponsored 
coverage and seeking individual market coverage--particularly those 
with a preexisting health condition. For example, older workers with 
preexisting health conditions may choose to retire early and obtain 
coverage through an individual market health plan,[Footnote 34] or 
employed individuals with a preexisting condition may choose to start 
a business and thus need to obtain coverage from the individual 
market. Currently, such workers may remain in a job due to fear of 
relying on the individual insurance market, where they could be 
subject to application denials or higher premiums in certain 
circumstances. 

Many experts cited specific provisions of PPACA as having potential to 
contribute to this job lock outcome. These include select PPACA 
insurance market reforms, to be fully implemented in 2014, which will 
require health plans offering group and individual coverage to accept 
all applicants regardless of health status and will prohibit these 
health plans from charging higher premiums because of preexisting 
conditions or medical history. Another provision that was cited as 
having potential to mitigate job lock is the establishment of 
Affordable Insurance Exchanges through which eligible individuals and 
small employers can compare and select coverage among multiple 
competing health plans. 

Uncertain or Varied Effects of PPACA on Premiums and Employer-
Sponsored Coverage Suggest an Uncertain Effect on Job Lock: 

The experts we interviewed generally agreed that the affordability of 
premiums for health coverage could have job lock implications, but 
cited uncertain or mixed effects of PPACA on premiums, and thus on job 
lock. Coverage available from the individual market is generally more 
expensive than employee contributions to employer-sponsored coverage 
and may be less comprehensive than coverage available from an 
employer, and this may cause job lock for some individuals.[Footnote 
35] Some experts said some provisions of PPACA may reduce premiums or 
other out-of-pocket costs for these individuals, while others will 
affect different people differently, and still other provisions may 
increase costs. For example: 

* Premium tax credits and cost-sharing reductions available under 
PPACA may reduce premium and other health care costs in the individual 
market for some low-wage individuals.[Footnote 36] 

* Expanded Medicaid eligibility under PPACA may reduce the costs of 
health coverage for those who are eligible. 

* Adjusted community rating requirements in the individual and small 
group markets under PPACA are likely to have different effects for 
different aged individuals. Notably, younger individuals may pay 
higher premiums, while older individuals may pay less than they 
otherwise would have. 

* Other PPACA provisions--such as the essential health benefits 
package requirements that will specify a minimum, standardized level 
of benefits to be included in all qualified health plans--could result 
in an increase in premiums.[Footnote 37] 

The experts we interviewed generally agreed that the availability of 
employer-sponsored health coverage could have job lock implications, 
but were uncertain or had differing views on the effect PPACA may have 
on employers' willingness to offer coverage and on job lock. Some 
experts noted that to the extent PPACA encourages more employers to 
offer health coverage, job lock may be mitigated because fewer workers 
would face the possibility of moving to an employer that does not 
offer health coverage. However, experts had a wide range of views 
about what effect PPACA would have on the extent to which employers 
offer coverage. Experts' views on specific PPACA provisions that may 
encourage employers to offer health coverage illustrate this 
uncertainty. For example, some experts said the following: 

Small business tax credits may provide a financial incentive for some 
employers to offer coverage; however, they are limited in value and 
temporary. In addition, the availability of subsidized coverage for 
eligible individuals in the Exchanges could encourage some small 
employers to stop offering coverage. 

The impact of the PPACA penalty on certain employers that do not offer 
health coverage may be limited because most large employers currently 
offer coverage, and those that do not may find the penalties to be 
less costly than providing coverage. Other large employers that 
already offer coverage may choose to discontinue it and pay the 
penalty, especially if they find it less burdensome administratively 
to drop coverage or less costly to pay the penalty. 

Experts also generally agreed that, if instead, PPACA reduces the 
likelihood that employers offer health coverage, job lock could also 
be mitigated because employment and health coverage would no longer be 
linked for certain workers. For example, workers whose current 
employers choose to stop offering coverage after PPACA implementation 
may be less job locked because retaining health coverage will not be a 
factor influencing these workers to remain in their current jobs. 

See enclosure IV for additional details on expert views on the 
likelihood that PPACA will mitigate job lock. 

Agency Comments: 

We provided a draft of this letter to the Departments of Health and 
Human Services and Labor for review and comment. Each agency provided 
technical comments which we incorporated as appropriate. 

We are sending copies of this report to the Secretary of Health and 
Human Services, the Secretary of Labor, and appropriate congressional 
committees. In addition, the report is available at no charge on the 
GAO website at [hyperlink, http://www.gao.gov]. If you or your staffs 
have any questions about this report, please contact Andrew Sherrill 
at (202) 512-7215 or sherrilla@gao.gov or John E. Dicken at (202) 512-
7114 or dickenj@gao.gov. Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. GAO staff members who made key contributions to 
this report are listed in enclosure V. 

Signed by: 

Andrew Sherrill: 
Director, Education, Workforce, and Income Security: 

Signed by: 

John E. Dicken: 
Director, Health Care: 

[End of section] 

Enclosure I: Literature Examining Job Lock[Footnote 38] 

Table 1: Studies Examining Influence of Employer Health Coverage on 
Decision to Stay or Change Jobs: 

Study: Adams, Scott J. "Employer-Provided Health Insurance and Job 
Change." Contemporary Economic Policy, vol. 22, no. 3 (July 2004): 357-
369; 
Dataset/years studied: March Current Population Survey (CPS); 
1988-2000; 
Population studied: Married men, aged 25-55; 
Findings consistent with job lock: Yes; 
Key findings: Study found evidence that employer-sponsored health 
coverage lowers mobility--specifically, a reduction in mobility of 
22.5 percent for those without alternative coverage. 

Study: Bansak, Cynthia and Steven Raphael. "The State Children's 
Health Insurance Program and Job Mobility: Identifying Job Lock Among 
Working Parents in Near-Poor Households." Industrial and Labor 
Relations Review, vol. 61, no.4 (July 2008); 
Dataset/years studied: Survey of Income and Program Participation 
(SIPP); 1996 and 2001; 
Population studied: Working fathers; 
Findings consistent with job lock: Yes; 
Key findings: Study found that after the introduction of the State 
Children's Health Insurance Program (SCHIP), married men who had 
eligible children (because they were low-income) and whose wives did 
not have coverage from their own employers were 5-6 percent more 
likely to separate from their current employer compared to before the 
introduction of SCHIP. 

Study: Berger, Mark C., Dan A. Black, and Frank A. Scott. "Is There 
Job Lock? Evidence from the Pre-HIPAA Era." Southern Economic Journal, 
vol. 70, no.4 (2004): 953-976; 
Dataset/years studied: SIPP; 1987 and 1990; 
Population studied: All SIPP respondents; 
Findings consistent with job lock: No; 
Key findings: Study found no statistically significant evidence of job 
lock, including no statistically significant increases in employment 
duration or decreases in wages for those with employer-sponsored 
health coverage and with health problems in the family as, according 
to the study, would be expected if job lock was pervasive. 

Study: Dey, Matthew S. and Christopher J. Flinn. "An Equilibrium Model 
of Health Insurance Provision and Wage Determination." Econometrica, 
vol. 73, no. 2 (March 2005): 571-627; 
Dataset/years studied: SIPP; 1996; 
Population studied: White males between 25 and 54 with a high school 
education; 
Findings consistent with job lock: No; 
Key findings: Study found employer-sponsored health coverage did not 
lead to serious inefficiencies in job mobility. According to the 
study, existence of job lock in other studies could be because people 
without insurance are more likely to experience negative health events 
and leave employment. 

Study: Gilleskie, Donna B. and Byron F. Lutz. "The Impact of Employer-
Provided Health Insurance on Dynamic Employment Transitions." The 
Journal of Human Resources, vol.37, no.1 (Winter 2002): 129-162; 
Dataset/years studied: NLSY79; 1989-1993; 
Population studied: Males aged 24-35; 
Findings consistent with job lock: Yes; 
Key findings: Study found evidence that employer-sponsored health 
coverage reduces mobility by 10 to 15 percent for young unmarried 
males, consistent with job lock. No evidence among young married males. 

Study: Kapur, Kanika. "Labor Market Implications of State Small Group 
Health Insurance Reform." Public Finance Review, vol. 31, no. 6 
(November 2003): 571-600; 
Dataset/years studied: March CPS; 1991-99; 
Population studied: Individuals aged 18-64, who have health insurance; 
Findings consistent with job lock: Yes; 
Key findings: Study found some evidence suggesting that state ratings 
reforms, which prohibits setting premium based on health status, 
increased job mobility for individuals with family health issues, but 
decreased job mobility for older workers. Study suggests that state 
portability reforms increased job mobility. However, overall results 
suggest that the effects of the full package of reforms are likely to 
be small. 

Study: Kim, Jaewhan and Peter Philips. "Health Insurance and Worker 
Retention in the Construction Industry." Journal of Labor Research, 
vol. 31, no.1 (February 2010): 20-38; 
Dataset/years studied: SIPP; 1996 and 2001; 
Population studied: Union and nonunion full-time construction workers; 
Findings consistent with job lock: Yes; 
Key findings: Study found union health coverage that was portable in 
the construction industry increased the probability of worker 
retention in the industry between 30 and 41 percent compared to 13-18 
percent for nonunion, nonportable employer-sponsored health coverage. 
Portable health coverage in the construction industry results in 
industry lock but not job lock. 

Study: Okunade, Albert A. and Phanindra V. Wunnava. "Availability of 
Health Insurance and Gender Differences in 'Job-Lock' Behavior; 
Evidence From NLSY." Journal of Forensic Economics, vol. 15, no.2 
(2002): 195-204; 
Dataset/years studied: NLSY79; 1996; 
Population studied: Whites; 
males and females who worked for pay in the nonagricultural, private 
sector; 
Findings consistent with job lock: Yes; 
Key findings: Study found women with employer-sponsored health 
coverage had almost 66 more weeks of tenure than women without. Men 
with employer-sponsored coverage had about 51.7 more weeks of tenure 
than men without. 

Study: Olson, Craig A. "Do Workers Accept Lower Wages in Exchange for 
Health Benefits?" Journal of Labor Economics, vol. 20, no.2 (April 
2002): S91-S114; 
Dataset/years studied: March-June CPS; 1990-93; 
Population studied: Households where husbands and wives both work, and 
wives work full-time; 
Findings consistent with job lock: Yes; 
Key findings: Study found wives with their own employer-sponsored 
health coverage accepted a wage about 20 percent lower than what they 
would have received working in a job without benefits. 

Study: Rashad,Inas and Eric Sarpong. "Employer-provided Health 
Insurance and the Incidence of Job Lock: A Literature Review and 
Empirical Test." Expert Review of Pharmacoeconomics and Outcomes 
Research, vol. 8, no. 6 (2008): 583-591; 
Dataset/years studied: National Health Interview Survey (NHIS); 
1997-2003/NLSY79;1989-2000; 
Population studied: Single, employed individuals with some form of 
health insurance; 
Findings consistent with job lock: Yes; 
Key findings: Study found individuals with employer-sponsored health 
coverage stayed on the job 16 percent longer and were 60 percent less 
likely to voluntarily leave their jobs than those with coverage that 
was not provided by their employers. 

Study: Sanz-de-Galdeano, Anna. "Job-Lock and Public Policy: Clinton's 
Second Mandate." Industrial and Labor Relations Review, vol. 59, no. 3 
(2006); 
Dataset/years studied: SIPP; 1996 Panel; 
Population studied: SIPP respondents aged 25-55, who were employed and 
not in military, agriculture, or construction; 
Findings consistent with job lock: Yes; 
Key findings: Study found the Health Insurance Portability and 
Accountability Act of 1996 (HIPAA) did not significantly reduce job 
lock. HIPAA increased job lock for single men (3.6 percent); 
slightly reduced job lock between 2.7 percent (single women) and 6.6 
percent (married women). 

Source: GAO. 

[End of table] 

Table 2: Studies Examining Influence of Employer Health Coverage on 
Decision to Become Self-Employed: 

Study: DeCicca, Philip. Health Insurance Availability and 
Entrepreneurship. Upjohn Institute Working Paper 10-167 (April 2010); 
Dataset/years studied: Behavioral Risk Factor Surveillance System; 
1991-1996; 
Population studied: Survey respondents, aged 25-59; 
Findings consistent with job lock: Yes; 
Key findings: Study found New Jersey's Individual Health Coverage 
Program (implemented in 1993) increased self-employment relative to 
four comparison groups by roughly 14-20 percent. For those with 
marital, smoking, or obesity issues, estimates are at the higher range 
of this group. 

Study: Fairlie, Robert W., Kanika Kapur, and Susan Gates. "Is Employer-
Based Health Insurance a Barrier to Entrepreneurship?" Journal of 
Health Economics, 30 (2011): 146-162; 
Dataset/years studied: March CPS; 1996-2006; 
Population studied: Wage and salary workers, aged 25-64 and 55-75; 
Findings consistent with job lock: Yes; 
Key findings: Study found men with family health problems and employer-
sponsored health coverage (and without alternative spousal coverage) 
are 1 percentage point more likely to stay in their current job rather 
than create a small business compared to all men with employer 
coverage in the study sample, for whom the business creation rate is 3 
percent per year. In addition, business ownership rates increase from 
just under age 65 (pre-Medicare eligible) to just over age 65 (post-
Medicare eligible), whereas it found no change in business ownership 
rates from just before to just after for others aged 55-75. 

Study: Heim, Bradley T. and Ithai Z. Lurie. "The Effect of Self-
Employed Health Insurance Subsidies on Self-Employment." Journal of 
Public Economics, 94 (2010): 995-1007; 
Dataset/years studied: Six year panel of tax return data; 1999-2004; 
Population studied: Taxpayers; 
Findings consistent with job lock: Yes; 
Key findings: Study found the increase in the deductibility of health 
insurance premiums (due to a change in tax policy) for self-employed 
workers increased self-employment by 9.1 to 14.9 percent. 

Study: Wellington, Alison J. "Health Insurance Coverage and 
Entrepreneurship." Contemporary Economic Policy, vol. 19, no. 4 
(2001): 465-478; 
Dataset/years studied: March CPS; 1993; 
Population studied: Employed married white husbands and wives, aged 25-
62; 
Findings consistent with job lock: Yes; 
Key findings: Study suggests having a guaranteed alternative source of 
health coverage increased the probability of self-employment between 
2.3 and 4.4 percentage points for husbands and 1.2 and 4.6 percentage 
points for wives. Findings suggest spousal (or universal) coverage 
could increase the percentage of self-employed in the workforce by 2 
to 3.5 percentage points. 

Source: GAO. 

[End of table] 

Table 3: Studies Examining Influence of Employer Health Coverage on 
Decision to Reduce Work Hours or Exit the Workforce: 

Study: Bradley, Cathy J ., David Neumark, Zhehui Luo, and Heather L. 
Bednarek. "Employment-contingent Health Insurance, Illness, and Labor 
Supply of women: Evidence From Married Women with Breast Cancer." 
Health Economics, 16 (2007): 719-737; 
Dataset/years studied: Metropolitan Detroit Cancer Surveillance System; 
2000-2002; 
Population studied: Women newly diagnosed with breast cancer in 
Detroit, aged 30-64; 
Findings consistent with job lock: Yes; 
Key findings: Study found that, after diagnosis, women who received 
health coverage through a spouse were less likely to continue working 
compared to women who were dependent on their own employer-sponsored 
health coverage. 

Study: Bradley, Cathy J., David Neumark, and Meryl I. Motika. The 
Effects of Health Shocks on Employment and Health Insurance: The Role 
of Employer-Provided Health Insurance. National Bureau of Economic 
Research Working Paper 17223 (2011); 
Dataset/years studied: Health and Retirement Study (HRS); 1996-2008; 
Population studied: Individuals aged less than 64; 
Findings consistent with job lock: Yes; 
Key findings: Study found that with a new adverse health diagnosis 
(not involving hospitalization or self-reported health decline), men 
with employer-sponsored health coverage had a 20 percent higher 
probability of staying in a job compared to men who had coverage 
through a spouse. 

Study: Cebi, Merve. Employer-Provided Health Insurance and Labor 
Supply of Married Women. Upjohn Institute Working Paper No. 11-171 
(2011); 
Dataset/years studied: NLSY79; 1989-2000; CPS; 2000; 
Population studied: Married women, aged 25-64; 
Findings consistent with job lock: Yes; 
Key findings: Study found wives who were covered by their husband's 
employer-sponsored health coverage were less likely to work than those 
who were not. Among those married women who did work, those with 
spousal coverage worked less than those without. 

Study: Hamersma, Sarah and Matthew Kim. "The Effect of Parental 
Medicaid Expansions on Job Mobility." Journal of Health Economics, 28 
(2009): 761-770; 
Dataset/years studied: SIPP; 1996-2001; 
Population studied: Men and women, aged 20-54 who were not self-
employed or receiving disability payments; 
Findings consistent with job lock: Yes; 
Key findings: Study found that expanding Medicaid eligibility reduced 
job lock for unmarried women. For every $100 of Medicaid threshold, 
the probability that an unmarried woman with employer-sponsored health 
coverage would quit her job increased by 0.1 percentage point, which 
is about 4 percent of the average quit rate of the study sample. The 
change in Medicaid threshold did not affect quit rates for men. 

Study: Kapinos,Kandice A. "Changes in Spousal Health Insurance 
Coverage and Female Labor Supply Decisions." Forum for Health 
Economics and Policy (2009); 
Dataset/years studied: CPS; 1995-2005; 
Population studied: Married women; 
Findings consistent with job lock: Yes; 
Key findings: Study found wives whose husbands had access to employer 
health coverage worked about 10 percent fewer hours a week than women 
without spousal coverage, and such wives were also less likely to work 
at all. 

Study: Murasko, Jason E. "Married Women's Labor Supply and Spousal 
Health Insurance Coverage in the United States: Results from Panel 
Data." Journal of Family and Economic Issues (2008): 391-406; 
Dataset/years studied: Medical Expenditure Panel Survey (MEPS); 1996-
2004; 
Population studied: Married women, aged 25-54; 
Findings consistent with job lock: Yes; 
Key findings: Study found married women worked about 1 hour less per 
week or were 7.9 percent less likely to work when their husbands had 
health coverage. 

Study: Perry, Cynthia D., Genevieve M. Kenney, and Bogdan 
Tereshchenko. Disability Onset Among Working Parents: Earnings Drops, 
Compensating Income Sources, and Health Insurance Coverage. Low-Income 
Working Families Paper 11. The Urban Institute (2009); 
Dataset/years studied: SIPP; 1996 and 2001; 
Population studied: Employed individuals aged 25-58 living with a 
child under 18; 
Findings consistent with job lock: Yes; 
Key findings: Study found persons with employer-sponsored health 
coverage reduced their work hours by about 2.7 hours a week at time of 
disability onset. This compared with a reduction of 3.6 hours for 
persons with other private coverage and over 8 hours for persons 
covered by public coverage or without coverage. 

Study: Royalty, Anne Beeson; 
and Jean M. Abraham. "Health Insurance and Labor Market Outcomes: 
Joint Decision-Making within Households." Journal of Public Economics, 
90 (2006): 1561-1577; 
Dataset/years studied: MEPS; 1996-1998; 
Population studied: Married households aged 19-64, in which at least 
one is employed outside the home; 
Findings consistent with job lock: Yes; 
Key findings: Study found workers whose spouses had employer-sponsored 
health coverage were less likely to have their own employer-sponsored 
health coverage and were also less likely to work full-time. 

Study: Stroupe, Kevin T, Eleanor D. Kinney, and Thomas J. J. Kniesner. 
"Chronic Illness and Health Insurance-related Job Lock." Journal of 
Policy Analysis and Management, vol. 20 no. 3 (2001): 525-544; 
Dataset/years studied: Phone interviews and follow-up mailed 
questionnaires; 1994; 
Population studied: Employed individuals with chronic medical 
conditions in the family in Indiana; 
Findings consistent with job lock: Yes; 
Key findings: Study found having employer-sponsored health coverage 
reduced the propensity of individuals facing a chronic illness to quit 
work by 41 percent for men and 39 percent for women compared to 
workers who did not rely on their employer for coverage. 

Study: Tunceli, K., P.F. Short, J.R. Moran, and O. Tunceli. "Cancer 
Survivorship, Health Insurance, and Employment Transitions among Older 
Workers." Inquiry, 46 (2009): 17-42; 
Dataset/years studied: Penn State Cancer Survivor Study and HRS; 1997-
2002; 
Population studied: Workers, aged 55-64; 
Findings consistent with job lock: Yes; 
Key findings: Study found individuals with employer-sponsored health 
coverage were less likely to leave the labor force, reduce hours, or 
change jobs compared to those without employer-sponsored health 
coverage. These differences were particularly striking for cancer 
survivors. 

Source: GAO. 

[End of table] 

Table 4: Studies Examining Influence of Employer Health Coverage on 
Decision to Retire: 

Study: Blau, David M. and Donna B. Gilleskie. "Retiree Health 
Insurance and Labor; 
Force Behavior of Older Men in the 1990s." The Review of Economics and 
Statistics, vol. 83, no.1 (February 2001): 64-80; 
Dataset/years studied: HRS; 1992 and 1994; 
Population studied: Men aged 50-61 and their spouses; 
Findings consistent with job lock: Yes; 
Key findings: Study found the availability of retiree health coverage 
increases the exit rate from the labor force from 6.6 percent to 8.4 
percent when the worker shares the cost with the employer, and from 
6.9 percent to 11.2 percent if the employer pays the full cost. Study 
projected labor force participation for men aged 55-59 would be 74.5 
percent without retiree health coverage and 65.8 percent with retiree 
health coverage, and for men aged 60-64, labor force participation 
would be 47.1 percent without and 35.2 percent with retiree health 
coverage. Authors state that other factors may have a role in these 
projections. 

Study: Boyle, Melissa A. and Joanna N. Lahey. "Health Insurance and 
the Labor Supply Decisions of Older Workers: Evidence from a U.S. 
Department of Veterans Affairs Expansion." Journal of Public 
Economics, 94 (2010): 467-478; 
Dataset/years studied: March CPS; 1992-2002; 
Population studied: Male veterans and nonveterans, aged 55-64; 
Findings consistent with job lock: Yes; 
Key findings: Study found older workers were significantly more likely 
to decrease work after receiving access to non-employer-based health 
coverage--either becoming self-employed, working part-time or exiting 
the labor market, such as retiring. Study also suggests that job lock 
is stronger for more educated individuals. 

Study: French, Eric and John Bailey Jones. "The Effects of Health 
Insurance and Self-Insurance on Retirement Behavior." Econometrica, 
vol. 79, no. 3 (May 2011): 693-732; 
Dataset/years studied: HRS; data for every 2 years from 1992-2006; 
Population studied: Male heads of households, aged 57-61 in 1992; 
Findings consistent with job lock: Yes; 
Study found the rate of job exit at 62 would be 8.5 percentage points 
higher if all workers had health coverage that was not tied to working 
(retiree health coverage) before Medicare becomes available. 

Study: Marton, James and Stephen A. Woodbury. Retiree Health Benefit 
Coverage and Retirement. The Levy Economics Institute of Bard College 
Working Paper No. 470 (August 2006); 
Dataset/years studied: HRS; 1992-94, 1994-96; 
Population studied: Men born from 1931-41 who were working full-time 
in 1992; 
Findings consistent with job lock: Yes; 
Key findings: Study found workers with retiree health coverage were 29 
to 55 percent more likely to retire than those without. 

Study: Marton, James, and Stephen A Woodbury. The Influence of Retiree 
Health Benefits on Retirement Patterns. Upjohn Institute Working Paper 
No. 10-163 (February 2010); 
Dataset/years studied: HRS; 1992-2004; 
Population studied: Older male workers working full-time; 
Findings consistent with job lock: Yes; 
Key findings: Study found retiree health coverage increased the 
probability of retirement for men aged 60-64 by 5-7.5 percentage 
points. There was no effect for men aged 50-56 and modest to no effect 
for men aged 57-59. 

Study: Zissimopoulos, Julie M., Nicole Maestas, and Lynn A. Karoly. 
The Effect of Retirement Incentives on Retirement Behavior: Evidence 
From the Self-employed in the United States and England. RAND Working 
Paper WR-528 (October 2007); 
Dataset/years studied: HRS and English Longitudinal Survey of Aging; 
2002 and 2004; 
Population studied: Workers aged 55 to 70 in 2002; 
Findings consistent with job lock: Yes; 
Key findings: Study found access to non-employer provided health 
coverage (or retiree benefits for wage workers) in the United States 
increased the percentage of workers exiting the labor force at all 
ages. 

Source: GAO. 

[End of table] 

[End of section] 

Enclosure II: 

Experts Interviewed by GAO about the Ability of PPACA to Mitigate Job 
Lock: 

Health care reform stakeholder perspective: Researcher; 
Organization: American Enterprise Institute for Public Policy Research;
Organization: The Commonwealth Fund;
Organization: Employee Benefit Research Institute;
Organization: Henry J. Kaiser Family Foundation;
Organization: Heritage Foundation;
Organization: National Bureau of Economic Research;
Organization: Urban Institute. 

Health care reform stakeholder perspective: Consumer; 
Organization: Families USA. 

Health care reform stakeholder perspective: Federal government; 
Organization: Congressional Research Service; Department of Health and 
Human Services; 
Organization: Center for Consumer Information and Insurance Oversight 
and Office of the Assistant Secretary for Planning and Evaluation; 
Organization: Department of Labor; Employee Benefit and Security 
Administration, Bureau of Labor Statistics. 

Health care reform stakeholder perspective: Insurer; 
Organization: America's Health Insurance Plans; 
Organization: The Blue Cross and Blue Shield Association. 

Health care reform stakeholder perspective: State government; 
Organization: National Association of Insurance Commissioners. 

Health care reform stakeholder perspective: Unions; 
Organization: American Federation of Labor and Congress of Industrial 
Organizations (AFL-CIO). 

Source: GAO. 

[End of table] 

[End of section] 

Enclosure III: 

Selected Patient Protection and Affordable Care Act Provisions That 
May Affect Job Lock: 

This enclosure summarizes and provides some context for selected 
Patient Protection and Affordable Care Act (PPACA) provisions that may 
affect job lock. We reviewed published summaries of the law[Footnote 
39] and obtained input from the Department of Health and Human 
Services and the Congressional Research Service to initially identify 
potential areas of impact of PPACA, how those potential areas of 
impact, if realized, could affect job lock, and the specific PPACA 
provisions most likely to influence job lock.[Footnote 40] We then 
used this information as a basis for discussions with multiple experts 
that conduct research and analysis on health coverage and labor market 
issues, including organizations that represent key health care reform 
stakeholders and a range of perspectives. (See enclosure II for a list 
of the experts we interviewed.) During these interviews, we solicited 
views on the potential of PPACA to affect job lock overall and the 
role specific provisions of the law may play. The goal of the 
interviews was to assess expert views on the potential of PPACA to 
affect job lock; we did not attempt to more generally assess the labor 
market or other economic implications of the law. The enclosure 
identifies three potential areas of impact of PPACA, and the specific 
PPACA provisions under each potential area of impact most likely to 
influence job lock.[Footnote 41] 

Area of Potential Impact 1: Expand Access to Coverage, Particularly 
for Individuals with Preexisting Health Conditions: 

Specific PPACA provisions most directly relevant to job lock, based on 
their potential impact: 

Effective date: 2010; 

Establish a temporary, federally funded high-risk insurance pool 
program (the Pre-existing Condition Insurance Plan) for individuals 
who have been uninsured for more than 6 months and have a preexisting 
condition. Program ends on January 1, 2014. Patient Protection and 
Affordable Care Act, Pub. L. No. 111-148, § 1101, 124 Stat. 119, 141 
(2010). 

Prohibit health plans and issuers offering group or individual health 
insurance coverage from imposing any preexisting condition exclusions 
for children under age 19.[A] This prohibition will be extended to 
adults in 2014. Pub. L. No. 111-148, §§ 1201, 10103(e), 124 Stat. 154, 
895. 

Require group health plans and individual market plans offering 
dependent coverage to continue to make such coverage available to 
unmarried children until they turn 26.[B] Pub. L. No. 111-148, § 
1001(5), 124 Stat. 130. 

Effective date: 2014; 

Prohibit health plans and issuers offering group or individual health 
insurance coverage from denying coverage or charging higher premiums 
because of preexisting conditions or medical history or from denying 
availability of coverage. Pub. L. No. 111-148, § 1201, 124 Stat. 154-
156. 

Prohibit health plans and issuers offering group or individual health 
insurance coverage from imposing waiting periods (the time period that 
must pass before an individual is eligible to use health benefits) 
greater than 90 days. Pub. L. No. 111-148, § 1201, 124 Stat. 154, 161. 

Establish Affordable Insurance Exchanges (Exchanges) at the state 
level through which eligible individuals can compare, select and 
purchase health coverage amongst participating health plans. 
Individuals may enroll in an Exchange health plan if they are a lawful 
resident of the state that established an Exchange and are not 
incarcerated. Pub. L. No. 111-148, §§ 1311, 1312(f), 124 Stat. 173, 
183. 

Area of Potential Impact 2: Reduce Premiums or Out-of-Pocket Costs: 

Specific PPACA provisions most directly relevant to job lock, based on 
their potential impact: 

Effective date: 2010; 

From April 1, 2010, through December 31, 2013, states will have the 
option to expand Medicaid eligibility to all non-pregnant individuals 
under 65 years of age with incomes of up to 133 percent of the federal 
poverty level through a state plan amendment. Starting in 2014, states 
participating in Medicaid will be required to expand Medicaid 
eligibility to include these individuals. Pub. L. No. 111-148, §§ 
2001(a), 10201(b), 124 Stat. 271, 274, 918. 

Effective date: 2011; 

Health insurers must generally spend at least 80 percent (for 
individual or small group market issuers) or 85 percent (for large 
group market issuers) of their premium revenues for the plan year on 
reimbursement for clinical services and health care quality 
improvement activities or be required to issue rebates to 
enrollees.[C] Pub. L. No. 111-148, §§ 1001(5), 10101(f), 124 Stat. 
136, 885. 

Effective date: 2014; 

Provide advanceable, refundable tax credits to lower premium costs for 
individuals and families making between 133 and 400 percent of the 
Federal Poverty Level enrolled in Exchange plans. Provide cost-sharing 
reductions for individuals and families making up to 400 percent of 
the Federal Poverty Level[D] to reduce out-of-pocket costs for 
deductibles, copayments, and other costs. Pub. L. No. 111-148, §§ 
1401, 1402, 1412, 124 Stat. 213, 220, 231(as amended by Pub. L. No. 
111-152, § 1001, 124 Stat. 1030). 

Require all non-grandfathered individual and small group market plans 
to offer an essential health benefits package--health insurance 
coverage that will cover specified benefits, will not exceed specified 
cost-sharing and deductible limits, and will not impose a deductible 
on specified preventive services.[E] Pub. L. No. 111-148, §§ 1201(4), 
1302, 124 Stat. 161,163. 

Require that premiums for individual and small group health plans are 
based on rules that may allow premiums to vary based only on four 
specified factors: age, geography, tobacco use and whether coverage is 
provided for an individual or family.[F] Pub. L. No. 111-148, § 
1201(4), 124 Stat. 155. 

Require most individuals to maintain minimum essential health 
insurance coverage or pay a tax penalty, referred to as the individual 
mandate. Minimum coverage includes specified government plans, an 
employer-sponsored plan, plans in the individual market, grandfathered 
health plans, or other coverage recognized by the Secretary.[G] Pub. 
L. No. 111-148, §§ 1501(b), 10106(b), 124 Stat. 244, 909. 

Examine alternative provider payment structures and methodologies 
under Medicare, Medicaid, and the Children's Health Insurance Program. 
Several provisions attempt to encourage payment reforms and 
innovations that would reduce health care costs under these 
programs.[H] See, e.g., Pub. L. No. 111-148, §§ 3021, 3022, 3403, 
10320, 124 Stat. 353, 389, 395, 489, 949. 

Area of Potential Impact 3: Encourage Employers to Offer Health 
Coverage: 

Specific PPACA provisions most directly relevant to job lock, based on 
their potential impact: 

Effective date: 2010; 
Provide tax credits for eligible small businesses with fewer than 25 
full-time equivalent employees and average annual wages below $50,000 
(to be adjusted for cost-of-living after 2013). To be eligible for the 
tax credits, an employer must generally contribute at least 50 percent 
of the total monthly premium. From 2010 to 2013, a tax credit of up to 
35 percent of the employer's contribution to premiums is available, 
based on the number of employees and average annual wages. In 2014, 
the available tax credit rises to up to 50 percent for eligible 
employers that purchase health insurance through state Exchanges. 
Beginning in 2014, the tax credit is limited to 2 consecutive tax 
years. Pub. L. No. 111-148, §§ 1421, 10105(e), 124 Stat. 237, 906. 

Effective date: 2014; 
Impose financial penalties for applicable large employers[I] that do 
not offer minimum essential health insurance coverage to their full-
time employees and have at least one full-time employee who has 
enrolled in a plan with respect to which an applicable premium tax 
credit or cost-sharing reduction is allowed or paid with respect to 
the employee. Pub. L. No. 111-148, § 1513, 124 Stat. 253. 

Impose financial penalties for applicable large employers that do 
offer minimum essential health insurance coverage to their full-time 
employees and one or more of their full-time employees has enrolled in 
a plan with respect to which an applicable premium tax credit or cost-
sharing reduction is allowed or paid with respect to the employee. 
Pub. L. No. 111-148, § 1513, 124 Stat. 253. 

Award grants to states to establish health insurance Exchanges for 
small businesses (Small Business Health Options Program, or SHOP 
Exchange). The Exchanges will provide qualified small businesses with 
access to health insurers' qualified health plans and must be 
governmental agencies or nonprofit entities established by a state. 
Between 2014 and 2016, businesses with up to 100 employees may elect 
to make all full-time employees eligible for one or more qualified 
health plans offered through these Exchanges. Additionally, before 
2016, states may elect to limit eligibility to businesses with up to 
50 employees. In 2017, states can allow businesses with more than 100 
employees to elect to make all full-time employees eligible for one or 
more qualified health plans in the large group market through these 
Exchanges. Pub. L. No. 111-148, §§ 1310, 1311, 1312, 124 Stat. 171, 
173, 182. 

Require most individuals to maintain minimum essential health 
insurance coverage or pay a tax penalty, referred to as the individual 
mandate.[J] Pub. L. No. 111-148, §§ 1501(b), 10106(b), 124 Stat. 244, 
909. 

Source: GAO analysis of PPACA. 

[A] Some health plan issuers sell "child only" policies, which are 
sold in the individual health insurance market to children under 19 
years of age. 

[B] According to the National Conference of State Legislatures, prior 
to the effective date of the PPACA dependent coverage provision, 37 
states had extended the age that dependent children could receive 
coverage under their parents' health plans and most required that the 
children be unmarried and financially dependent on their parents. See 
National Conference of State Legislatures, Dependent Health Coverage 
(State Implementation). 

[C] This is referred to as a medical loss ratio requirement. 

[D] Cost sharing for individuals and families making 250 to 400 
percent would be completely offset by a requirement to purchase a 
specified level of coverage in a qualified health plan, See, 76 Fed, 
Reg. 51202, 51209, 51228 (Aug. 17, 2011) (to be codified at 45 C.F.R. 
§ 155.305(g)(1)(iii)). 

[E] Specifying minimum levels of coverage may place upward pressure on 
premiums, but could limit exposure to out-of-pocket costs. 

[F] Health status is not among the list of specified factors based 
upon which premiums may vary. This requirement is considered a form of 
adjusted community rating. 

[G] Downward pressure on premiums may result if more healthy 
individuals are prompted to obtain health coverage. 

[H] These include the Center for Medicare and Medicaid Innovation, the 
Shared Savings Program, the Independent Payment Advisory Board, and 
the Hospital Value-Based Purchasing Program. Payment models used in 
public programs are often adopted by private payers, and thus could 
encourage reductions in premiums and health care costs for employers 
and workers in the long term. 

[I] PPACA defines an applicable large employer as an employer who 
employed an average of at least 50 full-time employees on business 
days during the preceding calendar year. 124 Stat. 254. 

[J] The requirement that they have coverage may prompt employees to 
encourage employers to offer coverage. 

[End of table] 

[End of section] 

Enclosure IV: 

Expert Views on the Likelihood That Selected Patient Protection and 
Affordable Care Act Provisions Will Mitigate Job Lock: 

This enclosure summarizes the views of experts we interviewed 
regarding the likelihood that selected PPACA provisions will mitigate 
job lock. The views relate to PPACA provisions that are organized into 
three potential areas of impact that, if realized, could mitigate job 
lock: expanding access to coverage; reducing premium or out-of-pocket 
costs; and encouraging employers to offer coverage.[Footnote 42] 

Expanded Access to Health Coverage for Workers with Preexisting Health 
Conditions under PPACA Could Mitigate Job Lock: 

The experts we interviewed generally agreed that to the extent PPACA 
expands access to health coverage options for workers with employer-
sponsored coverage--particularly those with preexisting health 
conditions--job lock may be mitigated. Some experts emphasized the 
most significant expansion of coverage options for individuals with 
preexisting health conditions will likely be in the individual health 
insurance market, where plans will be required to accept applicants 
regardless of health status. 

Expanding Access to Coverage, Particularly for Individuals with 
Preexisting Health Conditions: 

Many experts cited the following PPACA provisions as having potential 
to expand access to health coverage for individuals with preexisting 
health conditions. 

* Prohibitions on denying or excluding coverage for or charging higher 
premiums because of preexisting health conditions or medical history: 
These PPACA provisions that reform the private insurance market--which 
would particularly help individuals moving from employer-sponsored 
group coverage to individual market coverage--have potential to help 
mitigate job lock. Unlike in the group and small group markets, health 
plan issuers in the individual markets of many states are currently 
permitted to decline applications for enrollment, meaning that 
individuals with preexisting health conditions may have difficulty 
accessing health coverage.[Footnote 43] 

* Affordable Insurance Exchanges: These Exchanges may expand access to 
coverage for individuals with preexisting health conditions and 
mitigate job lock. The Exchanges may provide eligible individuals with 
a simplified process to choose plans among the multiple options 
available and may help individuals move out of employer-sponsored 
coverage. The Exchanges will likely work best in conjunction with the 
other insurance market reforms discussed above. 

The experts we interviewed were less certain about or had mixed views 
of the potential for other PPACA provisions to expand access for 
workers with preexisting health conditions and thus help mitigate job 
lock. 

* Pre-existing condition insurance plans (PCIPs): While some experts 
suggested PCIPs could expand access for individuals with preexisting 
health conditions and help reduce job lock, others thought the PCIPs 
would have little or no effect. Some experts cited as very limiting 
the eligibility requirement that individuals go without any coverage 
for 6 months--something we have reported in the past that individuals 
with health conditions are reluctant to do.[Footnote 44] Some experts 
also cited the relatively low enrollment in PCIPs to date. Although 
the Office of the Actuary within the Centers for Medicare and Medicaid 
Services (CMS) had initially projected enrollment of 375,000 by the 
end of 2010, as of September 30, 2011 enrollment in the PCIPs totaled 
approximately 37,000 individuals. 

* No waiting periods greater than 90 days: While some experts said the 
waiting period restriction could expand access for individuals with 
preexisting health conditions and reduce job lock, others said it 
would have little effect because many plans, particularly employer-
sponsored health plans, already have maximum waiting periods of 90 
days or less. 

* Preexisting condition exclusion for children under 19: The 
children's preexisting condition restriction under PPACA could help 
expand access for children with preexisting health conditions and 
reduce job lock. Parents could leave jobs that provided coverage for 
these conditions and still obtain coverage for children with such 
conditions in individual market plans. However, it was noted that this 
provision had unintentionally resulted in some individual market 
health plans no longer providing child-only health plans or in the 
increase of premiums.[Footnote 45] 

* Dependent coverage: Expanding dependent coverage to age 26 may not 
affect access for individuals with preexisting health conditions and 
thus may not affect job lock. According to some of the experts we 
interviewed, some states already require health plans to provide 
dependent coverage to age 26 or close to that age threshold.[Footnote 
46],[Footnote 47] 

Reducing Costs Could Decrease Job Lock, though Varied or Uncertain 
Effects of PPACA on Premiums Suggest an Uncertain Effect on Job Lock: 

The experts we interviewed generally agreed that reducing premiums 
could have job lock implications, but cited uncertain or mixed effects 
of PPACA on premiums and thus on job lock. They agreed with the 
statement that prior to full PPACA implementation, some individuals--
particularly those that had faced higher premiums in the individual 
market because of their health status--might have difficulty finding 
affordable insurance options in the individual market if they leave 
the group health coverage offered through their employers. They 
generally agreed that to the extent premium costs or cost increases 
are reduced under PPACA and more affordable health insurance options 
become available for these individuals in the individual market, 
individuals may feel less compelled to remain in a current job 
primarily because it offered an affordable premium. However, despite 
general agreement that decreased premiums could reduce job lock, 
experts we spoke with said that the likelihood that PPACA will 
decrease premium costs varied by provision or was uncertain. 

Reducing Premiums or Out-of-Pocket Costs: 

Some experts noted that the following PPACA provisions have the 
potential to reduce premium costs. 

* Premium tax credits and out-of-pocket cost-sharing reductions: The 
premium tax credits and cost-sharing reductions may be important to 
reducing individual market premiums and other health care costs for 
eligible low-income individuals. Thus the credits and cost-sharing 
reductions have the potential to reduce job lock. Some lower-income 
individuals that qualify for the premium tax credits may leave their 
employer-sponsored coverage and use the tax credits to obtain coverage 
through the Exchanges, especially if their employers contribute a 
small portion of the total premium for the health coverage. 

* Expanded Medicaid eligibility: The Medicaid expansion may not affect 
job lock for the many newly eligible individuals that are not likely 
to have employer-sponsored coverage.[Footnote 48] It may mitigate job 
jock for some low-wage individuals who will be able to leave those 
jobs and accept jobs without health coverage and still have health 
coverage under Medicaid. Though mandatory in 2014 for Medicaid-
participating states, few states are expected to voluntarily expand 
their Medicaid programs sooner than required under this provision. 

* Individual mandate: The individual mandate has the potential to 
reduce overall individual market premium costs and potentially reduce 
job lock to the extent that it increases the share of healthy 
individuals who obtain coverage in the individual market. However, the 
penalties for not having coverage--particularly in the early years of 
the requirement--may not be large enough to encourage many of the 
youngest and healthiest people to obtain insurance who are needed to 
bring downward pressure on individual market premiums. To the extent 
the individual mandate does not reduce premium costs, job lock may not 
be mitigated. The premium tax credits and out-of-pocket cost 
reductions may similarly mitigate against adverse selection in the 
Exchanges, assuming that the tax credit population is healthy. 

* Provider payment reforms: PPACA payment reforms targeted toward 
reducing health care costs in federal health care programs have 
potential to eventually reduce premium costs or cost increases. For 
example, the Center for Medicare and Medicaid Innovation is tasked 
with reducing costs for the Medicare, Medicaid, and CHIP programs. 

Some experts said that other PPACA provisions could either have 
different premium effects for different individuals, or actually 
result in increases in premiums or costs for some. They also noted 
that because of the uncertain effect of these provisions on premiums, 
there was also uncertainty about their effects on job lock. 

* Adjusted community rating: The requirement that premiums for 
individual and small group plans may only vary based on specified 
factors that do not include health status is likely to have different 
effects for differently aged individuals. After implementation in 
2014, older or sicker individuals may find reduced premiums in the 
individual market--thus mitigating job lock for this segment of the 
workforce--while younger or healthier individuals may face higher 
premiums. 

* Minimum essential benefits: The minimum essential benefits 
requirement could result in premium increases for some individual 
market plans, as the benefits required to be covered will likely be 
more extensive than what many individual market plans currently 
offer.[Footnote 49] In part because the Department of Health and Human 
Services has not finalized guidance on the essential benefits 
requirement, there is uncertainty about the ultimate effects of this 
provision. 

* Medical loss ratio: The effects of this provision on premium costs 
and job lock are uncertain. Some experts said that the provision may 
decrease premiums. On the other hand, some experts said this provision 
may actually increase premium costs if health plans simply pay out 
more in claims as a means of reducing the ratio between administrative 
and medical care costs. We recently reported that several health plans 
planned to reduce the increase in premiums, among other actions that 
included decreasing commissions to brokers, in order to meet the ratio 
requirements. One health plan said it may reduce expenses on 
retrospective utilization review programs in order to meet the ratio 
requirements.[Footnote 50] 

Differing Views or Uncertainty in Predicting Effects of PPACA on 
Encouraging Employers to Offer Coverage Suggest an Uncertain Effect on 
Job lock: 

The experts we interviewed generally agreed that the availability of 
employer-sponsored health coverage could have job lock implications. 
Some experts noted that to the extent PPACA encourages more employers 
to offer health coverage, job lock may be mitigated because fewer 
individuals would face the possibility of moving to an employer that 
did not offer it. However, experts either had differing views of 
PPACA's potential effect on employer offer rates, or expressed 
uncertainty in predicting such effects.[Footnote 51] Should a drop in 
offer rates occur, it may be seen among small employers. Experts 
generally agreed that even if PPACA reduces the likelihood that 
employers offered health coverage, job lock could also be mitigated 
for certain individuals because employment and health coverage would 
no longer be linked. For example, individuals whose current employers 
choose to stop offering coverage after PPACA implementation may be 
less job locked because retaining health coverage will not be a factor 
influencing these individuals to remain in their current jobs. 

Encouraging Employers to Offer Health Coverage: 

Experts' views on specific PPACA provisions illustrate these differing 
views and uncertainty. For example, some experts said that: 

* Financial penalties: PPACA financial penalties for certain employers 
that do not offer coverage may encourage some employers to provide 
coverage and reduce job lock. However, the impact of the PPACA penalty 
on employers not offering coverage may be limited because most large 
employers currently offer coverage.[Footnote 52]Other large employers 
that already offer coverage may choose to discontinue it and pay the 
penalty, especially if they find it less burdensome administratively 
to drop coverage or less costly to pay the penalty. 

* Small business tax credits: The tax credits may encourage small 
employers to offer coverage and reduce job lock. However, the tax 
credits may have little effect because they are temporary and of 
limited value.[Footnote 53] 

* Small Business Health Options Program (SHOP Exchanges): The 
uncertainty that exists regarding implementation of these Exchanges 
makes it difficult to determine what effect they will have on small 
employer offer rates. Some experts pointed to mixed experience with 
similar small employer Exchanges currently existing in a limited 
number of states. On the other hand, if a substantial share of the 
small group market ultimately does provide health coverage through the 
SHOP Exchanges, then individuals could change jobs and maintain the 
same health plan, which could decrease job lock. 

* Individual mandate: Individuals may pressure their employers to 
provide coverage so that they can abide by the individual mandate 
requirement, resulting in an increase in employer offer rates. 

[End of section] 

Enclosure V: 

GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Andrew Sherrill, (202) 512-7215 or sherrilla@gao.gov: 

John E. Dicken (202) 512-7114 or dickenj@gao.gov: 

Staff Acknowledgments: 

In addition to the contacts named above, Randy Dirosa and Lori 
Rectanus (Assistant Directors), and Jawaria Gilani, Joel Marus, and 
Cady Panetta made key contributions to this report. Benjamin Bolitzer 
and Yesook Merrill provided economic expertise, and Luann Moy provided 
methodological assistance. Susannah Compton provided writing 
assistance and Ashley McCall provided literature search assistance. 
James Rebbe and George Bogart provided legal assistance. 

[End of section] 

Footnotes: 

[1] DeNavas-Walt, Carmen, Bernadette D. Proctor, and Jessica C. Smith, 
U.S. Census Bureau, Current Population Reports, P60-239, Income, 
Poverty, and Health Insurance Coverage in the United States: 2010 
(U.S. Government Printing Office, Washington, D.C.: 2011). 

[2] Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended by the 
Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-
152, 124 Stat. 1029 (2010). 

[3] We searched multiple bibliographic databases, including ProQuest, 
EconLit, PubMed, PolicyFile, and Academic OneFile, as well as a number 
of social science and medical databases using the Dialog platform. 

[4] These studies differ in the data used, populations studied, and 
the empirical models used. In order to empirically isolate job lock, 
the studies use a variety of model specifications to control for 
factors other than health insurance that might influence worker 
mobility. Depending on the data used, these control variables include 
age, education, industry, occupation, alternative health coverage, 
health status, and family size. 

[5] See for example, Congressional Research Service, Private Health 
Insurance Provisions in the Patient Protection and Affordable Care 
Act, R40942 (Washington, D.C.: Sept. 21, 2010). 

[6] We did not attempt to independently identify or analyze all PPACA 
provisions that may potentially affect job lock, but instead addressed 
selected provisions that were referenced in the summaries we reviewed. 

[7] Another 31 percent of Americans received coverage through public 
programs like Medicare and Medicaid, and about 12 percent were 
uninsured. Percentages do not sum to 100 because estimates of coverage 
types are not mutually exclusive and individuals can have more than 
one type of coverage during the year. See U.S. Census Bureau, Income, 
Poverty, and Health Insurance Coverage in the United States: 2010 
(Washington, D.C.: 2011). 

[8] M.W. Stanton and M.K. Rutherford, Employer-sponsored health 
insurance: trends in cost and access, a report prepared for the Agency 
for Healthcare Research and Quality, Research in Action Issue 17, AHRQ 
Pub. No. 04-0085 (Rockville, Md.: 2004). 

[9] In 2011, almost all (99 percent) of large employers (those with 
200 or more workers) offered health coverage, compared to 59 percent 
of small employers (those with between 3 and 199 workers). In the 
small employer category, 48 percent of the smallest employers (those 
with between 3 and 9 workers) offered health coverage. See Kaiser 
Family Foundation and Health Research and Education Trust, Employer 
Health Benefits 2011 Annual Survey (Menlo Park, Calif., and Chicago, 
Ill.: 2011). 

[10] 29 U.S.C. § 1152(b); 42 U.S.C. § 300gg-1(b). 

[11] In 2011, employers contributed about 82 percent of the average 
annual premium ($5,429) for single coverage, i.e. coverage for the 
worker alone and 72 percent of the average annual premium ($15,073) 
for family coverage. See Kaiser Family Foundation and Health Research 
and Education Trust, Employer Health Benefits 2011 Annual Survey, 
(Menlo Park, Calif., and Chicago, Ill.: 2011). 

[12] See, e.g., 42 U.S.C. § 300gg-1(a). PPACA extends this prohibition 
to all individuals in the individual market beginning on or after 
January 1, 2014. Currently, issuers cannot deny coverage to children 
under 19 because of pre existing conditions. Pub. L. No. 111-142, §§ 
1201(4), 10103(e), 124 Stat. 156, 895. 

[13] According to the Kaiser Family Foundation, as of January 2011, 
Maine, Massachusetts, New Jersey, New York, and Vermont have 
guaranteed issue requirements that prohibit any insurer from denying 
coverage to an individual based on their current medical conditions or 
risk of poor health. An additional seven states have guaranteed issue 
requirements that only apply to certain insurance plans or during 
limited times of the year. Washington State requires insurers to 
guarantee issue coverage to certain individual market applicants based 
on a health status questionnaire. The remaining applicants are offered 
coverage through the state's high-risk pool, which provides coverage 
for individuals who--due to a preexisting health condition--have been 
denied enrollment or are charged higher premiums in the individual 
market. 

[14] Pub. L. No. 111-148, §§ 1201(4), 1311(b), 124 Stat. 155, 173. 
Although PPACA requires each state to establish an "American Health 
Benefit Exchange," CMS refers to such an Exchange as an Affordable 
Insurance Exchange. Accordingly, throughout this draft we refer to 
such Exchanges as Affordable Insurance Exchanges. 

[15] Between 2010 and 2013, PPACA provides states with an option to 
expand Medicaid eligibility to certain individuals with incomes of up 
to 133 percent of the federal poverty level, and in 2014 the expansion 
of Medicaid eligibility becomes required. Pub. L. No. 111-148, §§ 
2001(a), 10201(b), 124 Stat. 271, 274, 918. It also provides, in 2014, 
for tax credits and cost-sharing reductions to reduce premium and out-
of-pocket costs for individuals enrolled in Exchange plans. Pub. L. 
No. 111-148, §§ 1401, 1402, 1412, 124 Stat. 213, 220, 231. 

[16] In 2014, PPACA will require that premiums for health coverage in 
the individual and small group markets be based on rules that will 
allow premiums to vary based on only age, whether coverage is provided 
for an individual or family, geography, and tobacco usage. Pub. L. No. 
111-148, § 1201(4), 124 Stat. 155. Under these rules, considered a 
form of adjusted community rating, health coverage issuers will not be 
permitted to vary premiums based on the health status of applicants. 

[17] Scott J. Adams, "Employer-Provided Health Insurance and Job 
Change," Contemporary Economic Policy, vol. 22, no. 3 (July 2004): 357-
369. 

[18] The two other studies presented evidence that differences in 
mobility based on employer-sponsored coverage could be the result of 
other factors, such as the positive effects of health coverage on 
health status. 

[19] A 2002 review of the literature published in the preceding decade 
found that the literature from that decade also generally indicated 
that heath coverage can influence workers to remain in jobs they might 
otherwise leave. See Jonathan Gruber and Brigitte C. Madrian, Health 
Insurance, Labor Supply, and Job Mobility: A Critical Review of the 
Literature, Working Paper 8817, National Bureau of Economic Research 
(2002). 

[20] Adams, "Employer-Provided Health Insurance and Job Change." 

[21] Cynthia Bansak and Steven Raphael, "The State Children's Health 
Insurance Program and Job Mobility: Identifying Job Lock Among Working 
Parents in Near-Poor Households," Industrial and Labor Relations 
Review, vol. 61, no.4 (July 2008). SCHIP was established pursuant to 
federal law in 1997 and offers health insurance for children in low-
income families that do not qualify for Medicaid. See, Balanced Budget 
Act of 1997, Pub. L. No. 105-33, § 4901(a), 111 Stat. 251, 552. 

[22] At age 65, individuals become eligible for Medicare. If workers 
retire before 65 and do not have access to retiree health insurance, 
they may lack or have greater difficulty obtaining insurance between 
the age of retirement and 65. 

[23] James Marton and Stephen A. Woodbury, Retiree Health Benefit 
Coverage and Retirement, The Levy Economics Institute of Bard College 
Working Paper No. 470 (August 2006). 

[24] Cathy J. Bradley, David Neumark, and Meryl I. Motika, The Effects 
of Health Shocks on Employment and Health Insurance: The Role of 
Employer-Provided Health Insurance, National Bureau of Economic 
Research Working Paper 17223 (2011). 

[25] Kevin T. Stroupe, Eleanor D. Kinney, and Thomas J. J. Kniesner, 
"Chronic Illness and Health Insurance-related Job Lock," Journal of 
Policy Analysis and Management, vol. 20, no. 3 (2001): 525-544. 

[26] K. Tunceli, P.F. Short, J.R. Moran, and O. Tunceli, "Cancer 
Survivorship, Health Insurance, and Employment Transitions among Older 
Workers," Inquiry, 46 (2009): 17-42. 

[27] As shown in enclosure I, the datasets vary widely from the 
Current Population Survey, a nationwide survey of 60,000 households 
conducted by the Bureau of the Census to gather information on labor 
force characteristics of the U.S. population, to a registry of 
individuals diagnosed with cancer in the Detroit metropolitan area. 

[28] Pub. L. No. 104-191, 110 Stat. 1936. 

[29] Alan C. Monheit and Philip F. Cooper, "Health Insurance and Job 
Mobility: Theory and Evidence," Industrial and Labor Relations Review, 
vol. 48, no. 1 (October 1994). 

[30] While we did not find any empirical studies that have estimated 
the overall implications of job lock on the national economy, we found 
two estimates of the aggregate impact of job lock on the economy using 
computations based on simplifying assumptions that, if changed, could 
indicate a different impact of job lock. One of these analyses in 2002 
concluded that the cost of job lock to the economy was less than 0.1 
percent of gross domestic product. See Jonathan Gruber and Brigitte C. 
Madrian, Health Insurance, Labor Supply, and Job Mobility: A Critical 
Review of the Literature, Working Paper 8817, National Bureau of 
Economic Research (2002). The other piece found that the cost was 
about 1 percent of wages and about 0.2 percent of GDP in 2009. See 
Executive Office of the President, Council of Economic Advisers, The 
Economic Case for Health Care Reform (June 2009). 

[31] Robert W. Fairlie, Kanika Kapur, and Susan Gates, "Is Employer-
Based Health Insurance a Barrier to Entrepreneurship?" Journal of 
Health Economics ,30 (2011): 146-162. 

[32] David M. Blau and Donna B. Gilleskie, "Retiree Health Insurance 
and Labor Force Behavior of Older Men in the 1990s," The Review of 
Economics and Statistics, vol. 83, no.1 (February 2001): 64-80. 

[33] See enclosure III for additional information about specific PPACA 
provisions. 

[34] Congressional Budget Office, The Budget and Economic Outlook: An 
Update (August 2010). 

[35] Employers that offer health coverage typically pay a large share 
of their employees' health coverage premiums. This employer 
contribution generally makes employer-sponsored coverage more 
affordable than coverage obtained in the individual market, where 
individuals pay the full premium amount themselves, regardless of 
health status. Under PPACA, individuals that obtain coverage in the 
individual insurance market (including in Exchanges) will continue to 
pay the full cost of their premiums unless they qualify for a premium 
credit. The Congressional Budget Office estimates that in 2021, 20 
million of the 24 million enrollees in Affordable Insurance Exchanges 
will be receiving premium tax credits. See Congressional Budget 
Office, Analysis of the Major Health Care Legislation Enacted in March 
2010 (Washington, D.C.: March 3, 2011). However, PPACA prohibits 
health plans and issuers offering group or individual health insurance 
coverage from denying coverage or charging higher premiums because of 
preexisting conditions or medical history. 

[36] Some experts also noted that the PPACA provider payment reform 
provisions intended to reduce long-term health care cost growth, such 
as the Center for Medicare and Medicaid Innovation and the Independent 
Payment Advisory Board, have the potential to reduce premium costs 
over the long term. 

[37] The PPACA essential benefits package may ensure that health 
coverage available in the individual and small group markets will have 
the same scope of benefits as available under a typical employer plan. 
Those with individual market coverage have generally paid a higher 
share of their health costs out of pocket than those with employer-
sponsored group coverage. Therefore, according to some experts, 
although more comprehensive benefits under the essential health 
benefits requirement may increase premiums, it is also possible that 
the requirement could result in lower out-of-pocket costs for some. 

[38] We have defined job lock as a phenomenon that occurs when workers 
stay in jobs they might otherwise leave out of fear of losing their 
health care coverage. The studies included in this review are limited 
to those with empirically-based findings and published from 2001 to 
2011 in a journal with a peer-review process or by an independent 
research organization. 

[39] See for example, Congressional Research Service, Private Health 
Insurance Provisions in the Patient Protection and Affordable Care 
Act, R40942 (Washington, D.C.: Sept. 21, 2010). 

[40] We did not attempt to independently identify or analyze all PPACA 
provisions that may potentially affect job lock, but instead addressed 
selected provisions that were referenced in the summaries we reviewed. 

[41] This assessment is based on experts' predictions regarding the 
likelihood that various PPACA provisions may affect job lock. Given 
the somewhat speculative nature of this endeavor, this list may not be 
exhaustive, and it is possible that as PPACA is fully implemented, 
other provisions may also have an impact on job lock. 

[42] Additional information about the provisions discussed in this 
enclosure can be found in enclosure III. 

[43] According to the Kaiser Family Foundation, as of January 2011, 
Maine, Massachusetts, New Jersey, New York, and Vermont have 
guaranteed issue requirements that prohibit any insurer from denying 
coverage to an individual based on their current medical conditions or 
risk of poor health. An additional seven states have guaranteed issue 
requirements that only apply to certain insurance plans or during 
limited times of the year. Washington State requires insurers to 
guarantee issue coverage to certain individual market applicants based 
on a health status questionnaire. The remaining applicants are offered 
coverage through the state's high-risk pool, which provides coverage 
for individuals who--due to a preexisting health condition--have been 
denied enrollment or are charged higher premiums in the individual 
market. 

[44] See GAO, Pre-Existing Condition Insurance Plans: Program 
Features, Early Enrollment and Spending Trends, and Federal Oversight 
Activities, [hyperlink, http://www.gao.gov/products/GAO-11-662] 
(Washington, D.C.: July 27, 2011). 

[45] The Congressional Research Service has noted anecdotal evidence 
that some health plan issuers have decided to no longer offer child-
only policies. See Congressional Research Service, Preexisting 
Exclusion Provisions for Children and Dependent Coverage under the 
Patient Protection and Affordable Care Act, (Washington, D.C.: Jan. 
24, 2011). 

[46] According to the National Conference of State Legislatures, prior 
to the effective date of the PPACA dependent coverage provision, 37 
states had extended the age that dependent children could receive 
coverage under their parents' health plans and most required that the 
children be unmarried and financially dependent on their parents. See 
National Conference of State Legislatures, Dependent Health Coverage 
(State Implementation). 

[47] States regulate health insurance sold in their state, including 
to individuals and groups (such as employers), but state requirements 
(including dependent coverage) do not apply to coverage offered by 
employers that self-fund their health plans. 

[48] Under the PPACA Medicaid expansion, low-income individuals would 
receive subsidized health coverage through the Medicaid program with 
little or no premiums or cost-sharing expenses--thus likely reducing 
costs for these newly eligible individuals. 

[49] However, the more extensive benefits--more comparable to what 
group plans offer--may also limit individuals' exposure to out-of-
pocket costs under the plans. 

[50] See GAO, Private Health Insurance: Early Experiences Implementing 
New Medical Loss Ratio Requirements, [hyperlink, 
http://www.gao.gov/products/GAO-11-711] (Washington, D.C.: July 29, 
2011). 

[51] There are varying estimates of the effect that PPACA will have on 
employer-sponsored coverage. The Congressional Budget Office estimated 
that in 2014, there would be an increase of 6 million nonelderly 
individuals with employer-sponsored heath coverage. See Congressional 
Budget Office, Testimony on CBO's Analysis of the Major Health Care 
Legislation Enacted in March 2010 (Washington, D.C: Mar. 30, 2011). 
The Department of Health and Human Services' Office of the Actuary 
estimated that there would an increase of 2 million individuals with 
employer-sponsored coverage in 2014. Other studies estimate that 
employer offer rates may vary after PPACA is fully implemented in 2014 
from a decrease of 0.3 percent to an increase of 8.4 percent. 

[52] In 2011, almost all (99 percent) large employers offered health 
coverage, compared to 59 percent of small employers and 48 percent of 
the smallest employers (between 3 and 9 employees). See Kaiser Family 
Foundation and Health Research & Educational Trust, Employer Health 
Benefits 2011 Annual Survey, (Menlo Park, Calif., and Chicago, Ill.: 
2011). 

[53] According to the Treasury Inspector General of Tax 
Administration, as of mid-May 2011, approximately 228,000 taxpayers 
claimed this credit. 

[End of section] 

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