GAO-12-166R Job Lock and PPACA

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.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,

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?

 

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).
Page 2 GAO-12-166R Job Lock and PPACA

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.3 In addition, we reviewed the studies for 

methodological soundness for the purposes of our report.4 We identified 31 studies 

that met our criteria. (See enc. I for these studies).

To answer the second question, we reviewed published summaries of the law5 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.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 enc. 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.

 

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.
Page 3 GAO-12-166R Job Lock and PPACA

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.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.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.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 employersponsored coverage are not permitted under federal law to vary for similarly situated 

employees based on health status,

10

 

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). 

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— 

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). 

1029 U.S.C. § 1152(b); 42 U.S.C. § 300gg-1(b). 
Page 4 GAO-12-166R Job Lock and PPACA

more than 70 percent on average in 2011—of the premium costs,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.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.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.

 

14

 

11In 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). 

 Regarding affordability, PPACA expands Medicaid eligibility, 

establishes tax credits and cost-sharing reductions for coverage in the new 

12See, 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.

13According 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.

14Pub. 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.
Page 5 GAO-12-166R Job Lock and PPACA

Affordable Insurance Exchanges, and prohibits issuers from charging higher 

premiums because of preexisting conditions or medical history.15,16

Results in Brief

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 enc. III for more details on PPACA 

provisions that may affect job lock).

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 employersponsored 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.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.

 

15Between 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.

16In 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. 

17Scott J. Adams, “Employer-Provided Health Insurance and Job Change,” Contemporary Economic 

Policy, vol. 22, no. 3 (July 2004): 357-369.
Page 6 GAO-12-166R Job Lock and PPACA

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 EmployerSponsored 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.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 enc. I for key findings from the studies we reviewed).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.20

 

18The 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.

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 

19A 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). 

 

20Adams, “Employer-Provided Health Insurance and Job Change.” 
Page 7 GAO-12-166R Job Lock and PPACA

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). 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.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.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 employersponsored coverage had a 20 percent higher probability of staying in a job 

compared to men who have coverage through a spouse.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.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.26 

 

21Cynthia 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. 

 

22At 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. 

23James Marton and Stephen A. Woodbury, Retiree Health Benefit Coverage and Retirement, The 

Levy Economics Institute of Bard College Working Paper No. 470 (August 2006).

24Cathy 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).

25Kevin 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.

26K. 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.
Page 8 GAO-12-166R Job Lock and PPACA

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.27

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

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 enc. I). 

28

 

27As shown in enc. 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.

 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.

28Pub. L. No. 104-191, 110 Stat. 1936. 
Page 9 GAO-12-166R Job Lock and PPACA

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,29 the research we reviewed 

provides little empirical basis for assessing the aggregate labor market impact of job 

lock.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.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).32

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 

 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.

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.

33

 

29Alan 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).

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 

30While 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).

31Robert W. Fairlie, Kanika Kapur, and Susan Gates, “Is Employer-Based Health Insurance a Barrier 

to Entrepreneurship?” Journal of Health Economics ,30 (2011): 146-162.

32David 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.

33See enc. III for additional information about specific PPACA provisions.
Page 10 GAO-12-166R Job Lock and PPACA

to retire early and obtain coverage through an individual market health plan,34

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.

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.

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.35

• 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.

Some experts said some provisions of PPACA may reduce premiums or other outof-pocket costs for these individuals, while others will affect different people 

differently, and still other provisions may increase costs. For example:

36

 

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

35Employers 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. 

36Some 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. 
Page 11 GAO-12-166R Job Lock and PPACA

• 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.37

The experts we interviewed generally agreed that the availability of employersponsored 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.

 

37The 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.
Page 12 GAO-12-166R Job Lock and PPACA

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 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.

Andrew Sherrill 

Director, Education, Workforce, and Income Security 

John E. Dicken

Director, Health Care
Page 13 GAO-12-166R Job Lock and PPACA

Enclosure I

Literature Examining Job Lock38

Table 1: Studies Examining Influence of Employer Health Coverage on 

Decision to Stay or Change Jobs

Study Dataset/

years 

studied

Population 

studied

Findings 

consistent 

with job 

lock?

Key findings

Adams, Scott J. “EmployerProvided Health Insurance and 

Job Change.” Contemporary 

Economic Policy, vol. 22, no. 3 

(July 2004): 357-369.

March 

Current 

Population 

Survey 

(CPS); 1988-

2000

Married 

men, aged 

25-55 

Yes Study found evidence that employersponsored health coverage lowers 

mobility—specifically, a reduction in 

mobility of 22.5 percent for those 

without alternative coverage. 

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).

Survey of 

Income and 

Program 

Participation 

(SIPP); 1996 

and 2001 

Working 

fathers

Yes 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. 

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.

SIPP; 1987 

and 1990 

All SIPP 

respondents

No Study found no statistically significant 

evidence of job lock, including no 

statistically significant increases in 

employment duration or decreases in 

wages for those with employersponsored health coverage and with 

health problems in the family as, 

according to the study, would be 

expected if job lock was pervasive. 

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.

SIPP; 1996 White males 

between 25 

and 54 with 

a high 

school 

education

No 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.

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.

NLSY79; 

1989-1993

Males aged 

24-35

Yes Study found evidence that employersponsored health coverage reduces 

mobility by 10 to 15 percent for young 

unmarried males, consistent with job 

lock. No evidence among young 

married males. 

Kapur, Kanika. “Labor Market 

Implications of State Small 

Group Health Insurance 

Reform.” Public Finance 

Review, vol. 31, no. 6 

March CPS; 

1991-99 

Individuals 

aged 18-64, 

who have 

health 

insurance 

Yes 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, 

 

38We 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.
Page 14 GAO-12-166R Job Lock and PPACA

(November 2003): 571-600. 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. 

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.

SIPP; 1996 

and 2001 

Union and 

nonunion 

full-time 

construction 

workers 

Yes 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. 

Okunade, Albert A. and 

Phanindra V. Wunnava. 

“Availability of Health Insurance 

and Gender Differences in 'JobLock' Behavior; Evidence From 

NLSY.” Journal of Forensic 

Economics, vol. 15, no.2 

(2002): 195-204.

NLSY79; 

1996

Whites; 

males and 

females who 

worked for 

pay in the 

nonagricultural, private 

sector

Yes Study found women with employersponsored 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.

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.

March-June 

CPS; 1990-93 

Households 

where 

husbands 

and wives 

both work, 

and wives 

work fulltime

Yes 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. 

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.

National 

Health 

Interview 

Survey 

(NHIS); 1997-

2003/ 

NLSY79;1989

-2000 

Single, 

employed 

individuals 

with some 

form of 

health 

insurance 

Yes Study found individuals with employersponsored 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.

Sanz-de-Galdeano, Anna. “JobLock and Public Policy: 

Clinton's Second Mandate.” 

Industrial and Labor Relations 

Review, vol. 59, no. 3 (2006).

SIPP; 1996 

Panel

SIPP 

respondents 

aged 25-55, 

who were 

employed 

and not in 

military, 

agriculture, 

or 

construction 

Yes 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.
Page 15 GAO-12-166R Job Lock and PPACA

Table 2: Studies Examining Influence of Employer Health Coverage on 

Decision to Become Self-Employed

Study Dataset/

years 

studied

Population 

studied

Findings 

consistent 

with job 

lock?

Key findings

DeCicca, Philip. Health 

Insurance Availability and 

Entrepreneurship. Upjohn 

Institute Working Paper 10-167 

(April 2010).

Behavioral 

Risk Factor 

Surveillance 

System; 

1991-1996 

Survey 

respondents, 

aged 25-59 

Yes Study found New Jersey's Individual 

Health Coverage Program

(implemented in 1993) increased selfemployment 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.

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.

March CPS; 

1996-2006

Wage and 

salary 

workers, 

aged 25-64 

and 55-75 

Yes 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 (preMedicare 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.

Heim, Bradley T. and Ithai Z. 

Lurie. “The Effect of SelfEmployed Health Insurance 

Subsidies on Self-Employment.” 

Journal of Public Economics, 94 

(2010): 995-1007.

Six year panel 

of tax return 

data; 1999-

2004

Taxpayers Yes 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.

Wellington, Alison J. “Health 

Insurance Coverage and 

Entrepreneurship.” 

Contemporary Economic Policy,

vol. 19, no. 4 (2001): 465-478.

March CPS; 

1993

Employed 

married 

white 

husbands 

and wives, 

aged 25-62

Yes Study suggests having a guaranteed 

alternative source of health coverage 

increased the probability of selfemployment 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.
Page 16 GAO-12-166R Job Lock and PPACA

Table 3: Studies Examining Influence of Employer Health Coverage on 

Decision to Reduce Work Hours or Exit the Workforce

Study Dataset/

years studied

Population 

studied

Findings 

consistent 

with job 

lock?

Key findings

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.

Metropolitan 

Detroit Cancer 

Surveillance 

System; 2000-

2002

Women 

newly 

diagnosed 

with breast 

cancer in 

Detroit , 

aged 30-64

Yes 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.

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).

Health and 

Retirement 

Study (HRS); 

1996-2008

Individuals 

aged less 

than 64 

Yes 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. 

Cebi, Merve. EmployerProvided Health Insurance and 

Labor Supply of Married 

Women. Upjohn Institute 

Working Paper No. 11-171 

(2011).

NLSY79; 1989-

2000; CPS; 

2000

Married 

women, 

aged 25-64

Yes 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. 

Hamersma, Sarah and Matthew 

Kim. “The Effect of Parental 

Medicaid Expansions on Job 

Mobility.” Journal of Health 

Economics, 28 (2009): 761-770.

SIPP; 1996-

2001

Men and 

women, 

aged 20-54 

who were 

not selfemployed 

or receiving 

disability 

payments

Yes 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 employersponsored 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 threshhold did 

not affect quit rates for men.

Kapinos,Kandice A. “Changes 

in Spousal Health Insurance 

Coverage and Female Labor 

Supply Decisions.” Forum for 

Health Economics and Policy

(2009).

CPS; 1995-

2005

Married 

women 

Yes 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. 

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.

Medical 

Expenditure 

Panel Survey 

(MEPS); 1996-

2004 

Married 

women, 

aged 25-54 

Yes 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. 
Page 17 GAO-12-166R Job Lock and PPACA

Perry, Cynthia D., Genevieve 

M. Kenney, and Bogdan 

Tereshchenko. Disability Onset 

Among Working Parents: 

Earnings Drops, Compensating 

Income Sources, and Health 

Insurance Coverage. LowIncome Working Families Paper 

11. The Urban Institute (2009).

SIPP; 1996 

and 2001

Employed 

individuals

aged 25-58 

living with a 

child under 

18 

Yes Study found persons with employersponsored 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. 

Royalty, Anne Beeson; and 

Jean M. Abraham. “Health 

Insurance and Labor Market 

Outcomes: Joint DecisionMaking within Households.” 

Journal of Public Economics, 90 

(2006): 1561-1577.

MEPS; 1996-

1998 

Married 

households

aged 19-64, 

in which at 

least one is 

employed 

outside the 

home

Yes 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. 

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.

Phone 

interviews and 

follow-up 

mailed 

questionnaires; 

1994

Employed 

individuals 

with chronic 

medical 

conditions 

in the family 

in Indiana 

Yes Study found having employersponsored 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. 

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.

Penn State 

Cancer 

Survivor Study 

and HRS; 

1997-2002

Workers, 

aged 55-64 

Yes Study found individuals with employersponsored 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.
Page 18 GAO-12-166R Job Lock and PPACA

Table 4: Studies Examining Influence of Employer Health Coverage on 

Decision to Retire

Study Dataset/

years 

studied

Population 

studied

Findings 

consistent 

with job 

lock?

Key findings

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.

HRS; 1992 

and 1994 

Men aged 50-

61 and their 

spouses 

Yes 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.

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.

March CPS; 

1992-2002 

Male veterans 

and 

nonveterans, 

aged 55-64 

Yes Study found older workers were 

significantly more likely to decrease 

work after receiving access to nonemployer-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.

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.

HRS; data for 

every 2 years 

from 1992-

2006

Male heads of 

households, 

aged 57-61 in 

1992

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.

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).

HRS; 1992-

94, 1994-96

Men born 

from 1931-41 

who were 

working fulltime in 1992 

Yes Study found workers with retiree health 

coverage were 29 to 55 percent more 

likely to retire than those without. 

Marton, James, and Stephen 

A Woodbury. The Influence 

of Retiree Health Benefits on 

Retirement Patterns. Upjohn 

Institute Working Paper No. 

10-163 (February 2010).

HRS; 1992-

2004

Older male 

workers 

working fulltime

Yes 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. 

Zissimopoulos, Julie M., 

Nicole Maestas, and Lynn A. 

Karoly. The Effect of 

Retirement Incentives on 

Retirement Behavior: 

Evidence From the Selfemployed in the United 

States and England. RAND 

Working Paper WR-528 

(October 2007).

HRS and 

English 

Longitudinal 

Survey of 

Aging; 2002 

and 2004 

Workers aged 

55 to 70 in 

2002

Yes 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.
Page 19 GAO-12-166R Job Lock and PPACA

Enclosure II

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

Health care reform 

stakeholder perspective

Organization 

Researcher American Enterprise Institute for Public Policy 

Research

The Commonwealth Fund 

Employee Benefit Research Institute

Henry J. Kaiser Family Foundation

Heritage Foundation

National Bureau of Economic Research

Urban Institute

Consumer Families USA

Federal government Congressional Research Service 

Department of Health and Human Services; Center for 

Consumer Information and Insurance Oversight and 

Office of the Assistant Secretary for Planning and 

Evaluation 

Department of Labor; Employee Benefit and Security 

Administration, Bureau of Labor Statistics 

Insurer America’s Health Insurance Plans

The Blue Cross and Blue Shield Association

State government National Association of Insurance Commissioners

Unions American Federation of Labor and Congress of 

Industrial Organizations (AFL–CIO)

Source: GAO. 
Page 20 GAO-12-166R Job Lock and PPACA

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 law39 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. 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 enc. 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.41 

 

39See for example, Congressional Research Service, Private Health Insurance Provisions in the 

Patient Protection and Affordable Care Act, R40942 (Washington, D.C.: Sept. 21, 2010). 

40We 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.

41This 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.
Page 21 GAO-12-166R Job Lock and PPACA Effective date 

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

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.

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.

Effective date 

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

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.

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.

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 costsharing reductions for individuals and families making up to 400 percent of the Federal Poverty Leveld

 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.
Page 22 GAO-12-166R Job Lock and PPACA

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.

Effective date 

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

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.

2014 Impose financial penalties for applicable large employersithat 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 fulltime 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.jPub. 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.
Page 23 GAO-12-166R Job Lock and PPACA

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.
Page 24 GAO-12-166R Job Lock and PPACA

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. 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.43

 

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

 

43According 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.
Page 25 GAO-12-166R Job Lock and PPACA

• 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.44

• 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. 

 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. 

• 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.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 

 

 

44See GAO, Pre-Existing Condition Insurance Plans: Program Features, Early Enrollment and 

Spending Trends, and Federal Oversight Activities, GAO-11-662 (Washington, D.C.: July 27, 2011). 

45The 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). 
Page 26 GAO-12-166R Job Lock and PPACA

states already require health plans to provide dependent coverage to age 26 

or close to that age threshold.46, 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 lowincome 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- 

 

46According 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). 

47States 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.
Page 27 GAO-12-166R Job Lock and PPACA

sponsored coverage.48

• 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. 

 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.

• 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.49

 

48Under 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.

 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. 

49However, the more extensive benefits—more comparable to what group plans offer—may also limit 

individuals’ exposure to out-of-pocket costs under the plans. 
Page 28 GAO-12-166R Job Lock and PPACA

• 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.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 employersponsored 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.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 

 

50See GAO, Private Health Insurance: Early Experiences Implementing New Medical Loss Ratio Requirements, 

GAO-11-711 (Washington, D.C.: July 29, 2011). 

51There 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. 
Page 29 GAO-12-166R Job Lock and PPACA

offer coverage.52

• 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.

 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. 

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.

 

52In 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). 

53According to the Treasury Inspector General of Tax Administration, as of mid-May 2011, 

approximately 228,000 taxpayers claimed this credit. 
Page 30 GAO-12-166R Job Lock and PPACA

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.

(131082)
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