Insurance as motivation to stay put


January 25, 1994|By Patricia Meisol | Patricia Meisol,Staff Writer

One of the presumed problems with the current U.S. health care system is the much talked-about "job-lock." Because health insurance is tied to employment, the scenario goes, many people stay in jobs they would otherwise leave because they fear they will either lose coverage or pay far more for it. This frozen work force, in turn takes a big toll on the nation's economy.

Now comes a Syracuse University professor to take issue with this central thesis. Douglas Holtz-Eakin, in a brief prepared for the Jerome Levy Economics Institute at Bard College, argues that people covered by employer-provided insurance tend to leave their jobs in about the same proportion as people who aren't.

In his view, then, changing the way most people get health insurance -- from their employers -- won't make any difference in job mobility or national productivity.

Dr. Holtz-Eakin drew his conclusions after studying data on 5,000 families collected since 1984. Initially, when he looked only at individuals, the data tended to support the generally held assumption that people are not changing jobs because of their concern over health insurance or their personal medical situation.

When he took a further look -- this time focusing on married couples -- the data showed that a person whose spouse had health insurance was only slightly more likely to switch jobs than a person whose spouse didn't have insurance. The switch rate, about 15 percent, was the same for men as for women, for the well-paid as for the low-paid, and for the healthy as for those with problems.

Dr. Holtz-Eakin's conclusions drew skepticism from at least one expert on employee benefits.

"I don't agree with that at all," said William K. Flanigan, consultant for W F Corroon's Herget Division in Baltimore.

"The problem here is not with the large employers but the small employers," he said. Unlike large companies, he explained, small companies -- where most new jobs are being created -- often buy policies with exclusions for pre-existing medical conditions. Thus people who have medical problems, or have family members who do, are reluctant to move on.

"You've heard of the glass ceiling. This puts a person in a glass box," he said. "Practical experience points to that, time and time again."

Health plan tailored for small businesses

Making health insurance available more cheaply to small business is the aim of a new law in Maryland that requires insurance firms to sell a new minimum benefits package by July. Employers don't have to buy it, but some industry leaders say the packages could be very attractive to small companies that already insure workers at higher cost.

To secure a foothold in this potentially large market even before unveiling a plan to comply with the law, Blue Cross and Blue Shield of Maryland has introduced "Choice Advantage." It's a health maintenance organization geared to small businesses that gives people the option to see doctors outside the Blues network at a higher cost. The other benefit: Blue Cross says it won't consider medical history when selling the plan to groups of up to 199 people. Its price is expected to be only slightly higher than the Blues' traditional HMO.

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