Chart 1 SIJI-_IARY Chart 3 Table 1 Employee Benefit Research Institute/The Gallup Organization, Inc. "Public Attitudes on Health when certain qualifying events occur. Committee Qualified on employee Ways and s and Means their dependents may continue coverage oIndividuals in 1993 most likely to respond that the reason they did not change jobs was that • Holtz-Eakin (1993) indicated that there was little evidence that health insurance provision Table 3 Question 9: "Have you or a family member ever passed up a job opportunity or stayed in a job you would Question 10: "Which of the following Subcommi best describes ttee on the Health reason you or your family member chose Entitlement and Elections for Consolidated Omnibus Budget Reconciliation Act have preferred to lea'_e solely because of health benefits?," 1991-1993 • Mitchell (1982 and 1983) conducted one of the first studies regarding the magnitude of job lock. Public Opinion Results on Job Lock Benefits, 1993. Report Employmen no. G-50 t- (Washington, Related Health DC: Employee InsurancBenefit e.and Research Job Mob Institute, ility: November up to 18 months (29 months for disabled not toemployees) change Cha jobs?, rt if2 "em 1991 ployment and 1993 is terminated (other than for gross • For "the18-mon prospective th qualiemployer fying events, did the not avera offergehealth lengthbenefits" of coverawere ge was individuals 10.76 mont with hs. less For than 36-moa nth Snider, Sar interferes ah C. "P with ublicjob Opini mobility. on on In Hea his lth,study (COBRA), Retirement, of individuals and Other who changed Employee jobs Benef as icompared ts." EBRI Issue with •The original purpose of the coverage continuation provisions of the Consolidated Omnibus Budget Alternative Estimates of Job Lock in the United States Health Insurance Portability Question 9: Percentage of Individuals who Plan responded Years ye 1988-1993 s to, "Have- you or a family member ever passed up a 1993). Mitchell found evidence that tLe loss of a pension promise was a particularly strong deterrent EBRI, in conjunction with The Gallup Organization, Inc., conducted several public opinion Reconciliation misconduct) orA if cthours (COBRA) of work wasare to rassure educed workers below th an e lev ability el at to whmaintain ich coverag health e is nor insurance mally provided. during a Br/ef no. those 132 (Employee who did not Benefit he found Research that, Institute in analyzing , December health insurance 1992). alone, there was a correlation qualifying high schoolevents education , the average (48 percent), length individuals of coverage with was a23.i highmonths. school diploma Among individuals (38 percent), electing and job opportunity or stayed In a job you would have preferred to leave solely because of health benefits?," by T-98 period of transition to other coverage. COBRA requires employers to offer continued health coverage to to quitting. While Mitchell age, annual also, found incomeevidence , and education that medical level, 1993 coverage deterred employees Study Sample/Method Magnitude of Job Lock surveys regarding Americans' perspective on job lock. Some key findings include: 4 Dependents may continue coverage for up to 36 months if coverage is lost as a result of the employee Employees Employees Employees coverage individuals between, job less with mobility thanan1annual percent and health inco converted me insuof rance. $20,000-$75,000 to an However individual , when (35 policy. percent). looked at Individuals as part of a least totallikely to 90- employees and their dependents when certain qualifying events occur. Introduction Elected Entitled Elected from quitting, it was at a fairlv low level of reliability. Em losing ployecov e erage Ben,efitcessation Research of Inst dependent itute/The status Gal , lup death Organization, of the employee Inc. , "divorce Public Attitudes or legal separation on Health , or Snider, Sarah C. and Paul Fronstin."Sources of Health Insurance and Characteristics o,: the Uninsured: Mitchell (1982) give this Wage reason earners were 18-65 individuals yearswith of age an from annual theincome of Probability $75,000 or ofmore job change (16 percent). for men compensation package, asathe importanceasa of health insurance asa with regard to incentive to change • Of the 14.5 percent of employees and dependents eligible for COBRA coverage, about 1 in 5 (19.6 80- Mr. Chairman and members of the Committee, I am pleased to appear before you this morning Quality of Employment Survey in 1973 reduced by 4.24 percentage points,a 58% percentage percentage percentage • In 1993, 20 percent of surveyed Americans indicated they or a family member passed up a job Ben entitl efi ets m,ent Partto1." Medicar Report e. no. The G-30 charge (Washington, to COBRA DC: beneEmployee ficiaries durin Benefit g the Research coverageInstitute, period is February limited to jobs disappeared. • Difficulties surrounding COBRA coverage according to survey respondents included adverse Analysis of30 the March 1994 Current Population Survey." EBRI Issue Brief no. 158 (Employee Benefit percent) elected the coverage, according to 1994 survey data, up from 19.3 percent in 1993 but down from and 1977. Estimated a reduced form Not statistically significant. Survey of active of active of those '"o'I to discuss the issue of health insurance portability. I am Paul Fronstin, a research associate at the • Madrian (1993) and Cooper and Monheit (1993) provided the strongest evidence of job lock. 1992). a high of 28.5 percent in 1990. opportunity probitbased equation solely of on likelihood health benefits, of job up from 11 percent in 1992 and 13 percent in 1991 102 percent of the premium (102 percent of the cost if the plan is self-insured) 1 for similarly situated Year Research • In Institute, 1993, 70- individuals February employees most 1995). likely to employees respond that they entitled did not change jobs because "the selection/claims cost (36 percent); difficulties in collecting premiums (36 percent); change using baseline insurance status. Employee Benefit Research Institute (EBRI). Dallas Salisbury, the president of EBRI, asked that I (chart 1). Madrian estimates that job lock reduces the voluntary turnover rate of those with employer- Conclusion 25 28% employees for whom a qualifying event has not occurred. The employer may charge disabled prospective employer's health benefits provided less coverage than you or a family member administrative difficulty such as paperwork, record keeping, etc. (30 percent); excessive time 1989 1.70% 16.00% 11.20% • Average COBRA costs were $5,584, compared with $3,903 for active employees, according to the 1994 26% 60- m thank you for the invitation to testify and send his regret at not being able to appear himself. EBRI is a Madrian1990 (1994) 1987 National 2.60 Medical Expenditure 9.20 28.50 Mobility rates reduced by 30%-31% for provided health insurance by 25 percent, from 16 percent to 12 percent per year. Cooper and survey. Thus, average continuation of coverage costs were 149 percent of active employee claims costs, Gruber employees , Jonathan 102 perce and nt Brigitte for the C. firstMadrian."Health 18 months and up Insurance to 150 percent and Job during Mobility: the 19th The'Effects through of 29th Public month. had previously" were unmarried individuals (30 percent), college graduates (26 percent), and Spencer'sfor Seve Research beneficiary ral quesReports. tions response must "1994 , betracking address COBRA edeligibility Survey: when as One (24 sesspercent); in ing Five the Eligible im notification pact of Employees'Takes preexi from sting continuee condiCOBRA; tionof s election 1991 Survey. Sample 2.20 of married men 10.60 20-55 20.50 those with employment-related and, assuming employees electing coverage were paying 102 percent of the premium, employers were nonprofit, (D nonpartisan, public policy research organization based in Washington, DC. EBRI has been Monheit found that policyholders of employment-based coverage were three and one-half Policy ED •on In 199 Job-Lock." 20 3, among Industrial respondents and wh Labor o stated Relations they or Review a fami 23%(October ly member1994): passed 86-102. up a job opportunity 1992 o S_ everal 50- years surveys of age. have b Used 1 een .60 conducted a probit estimate 12.06 regarding of issues 13 surrounding .23 coveragethe compared use of COBRA. to thoseSom without e key and Employers health or individuals change insu Pay rOne-Third." ance in with status portabili an(19 Chicago, annual typercent); on income job IL:and lo Charles ck.of lack Does less of D.than final t Spencer he i$20 srules sue ,000 ,& ofcomplexity Associates, (26 the percent). portability of Inc., law Individuals August of (15 health percent). 19,least 1994.likely to paying for approximately one-third (32 percent) of the total costs for continued coverage. 21% 1993 the likelihood of 1.68 job change to derive 8.71 a 19.30 such coverage; mobility rates reduced committ e.-. ed, since its founding in 1978, to the accurate statistical analysis of economic security issues. times less likely to change jobs than uninsured workers. However, they did not find worker or based solely on health benefits, age, annual income, and education showed the greatest results of the Charles D. Spencer & Associates, Statement Inc. survey conducted in the spring of 1994 include: 2 give this reason were secretarial and clerical workers (6 percent) and individuals with an insurance affect job mobility? And, if so, to what extent? Only a few studies _ have been done 19 in% 1994 "difference in the 2.86 difference" estimator; 14.54 19.64 by 33%-37% fo_those married men with _ 30 £ 40- • Difficulties surrounding COBRA coverage according to survey respondents included adverse Through our o_ 1 r5 esearch, we strive to contribute to " the formulation of effective and responsible ,health .- and 13. dependent examined health three conditions empirical associated tests for with job mobili_. employment-related coverage and large variation (chart 2), while other variables, such as occupation, sex, race, region, and marital Holtz-Eakin this a Q_ rena, to Douglas."Health date and results of Insurance these stuProvision dies are m and ixed.Labor In addi Market tion, Efficiency studies thatinfithe nd tha United t States Why annualpeople income do of not $75 elect ,000 to and take more COBRA (7 percent). coverage has not been well documented. selection/claims cost (36 percent); difficulties in collecting premiums (36 percent); administrative "" _ 16% job lock. families (proxyfor medical care costs); Source: Charles D. Spencer and Associates, Inc., "1994 COBRA Survey: one in Five Eligible Employees retirement policies. Consistent with our mission, we do not lobby or advocate specific policy solutions. I status, showed little variation. 30- difficulty such as paperwork, record keeping, etc. (30 percent); and excessive time for beneficiary • Of the 14.5 percent of employees and dependents 15% eligible for COBRA coverage, about 1 in 5 (19.6 and Germany." Working Paper Series, no. 4388. Cambridge, MA: National Bureau of Economic having employment-based health insurance impacts on job mobility indicate that there is mobility rates reduced by 67% for Takes 1The COBRA; Internal Revenue Employers Service Pay One-Third," has issued guidance Spencer's forResearch determining Reports the pre (August mium 19, for 1994). self-funded plans. Before the 10 13% -- response, tracking eligibility (24 percent). would ask G_that my full statement be placed in the record. those with employment-related Premiums • Cooper may and be based Monheit on an (1993) actuarial also indicate determination that mobility for providing rates vary benefits basedfor onactive worker employees Research, 1993.- percent) elected the coverage in 1994, up from 19.3 percent in 1993 but down from a high of 28.5 Preexisting Conditions, Pricing, and Job Lock wide va • Irn iation 1993, in individuals the magnitude most likely of thattoimp respond act. C that OBRA theyma did y anot ct to change reduce jobs wha because tever job "you lock or someone 20- coverage and a pregnant wife (proxy during the20same period, or may be based on past cost. The latter is the 19903 cost equal to the plan's 1993 cost for The majority (57.4 percent) of Americans in 1993 received their health insurance coverage characteristics. Most likely to change jobs were younger workers with little job experience, • A part of the issue of portability is the1991 issue "_ of "job 20% lock." Job lock may 20Yo occur either because 19a%worker • Am percent ong age in 1990 groups (ta , ble 18-34 1). year olds were most likely to have passed up a job opportunity based does exist. Part H ooweve f the ri,ssue based of portability on House public iopi Ways s the nion issue and surv of eMeans yjob s, lock. someCommittee Job Amelro ic ck ansmay still occur indicate eitherhavi because ng a worke 4 t t," similarly insituated your family beneficiaries had a medical for the condition same period the during prospective the previous employer's for medical determination health care costs) plan.period did All statistically,_ notadjusted, cover" t. cannot get health insurance coverage through a prospective position, significant. or because while the worker can " through the employment-based system (Snider and Fronstin, 1995). This connection may affect 10. Subcommittee on Health by increases part-time or decreases workers, inworkers the cost-of-living with low as levels measured of education, by the gross and worke national rs with product. low hourly See Terry wages. 5 _-_ -- • solely on health benefits (28 percent). This compares with 21 percent among individuals aged Madrian, Brigitte, C. "Employment-Based Health Insurance and Job Mobility: Is There Evidence of Job- were individuals with an annual income of $75,000 and over (30 percent), women (27 percent), cannot passed get up a health job opportunity insurance coverage because health throughinsurance a prospective was noposition, t offered or in because the new while positionthe worker can obtain coverage, the premium is higher at the prospective job than at the initial job, the benefits Humo and Keith C. Kakacek, "Employers Guide to Self-insuring Health Benefits" (Washington, DC: employees' compensation and, for some, their decisions about job change. The conc_'n about the Holtz-Eakin (1994) 1984 wave of the Panel Study ofTable Income 2 For job changes during 1984-1985: - Least likely to change jobs were full-time workers, workers with high levels of education, and package 35-54 is less and generous, 7 percent or among selected individuals conditions aged are not 55covered and over(i.e., (chaa rtpreexisting 2). condition clause may Lock?" •Working Among the Paper entire Series 1994 , no. surveyed 4476. Camb population ridge, , MA: 2.9 percent Nationalof Bu the reau active of Economic employee Research, work force1993. " and individuals with a postgraduate degree (27 percent). Individuals least likely to give this_. obtain (33 Thompson percent coverage Publishing in 0 ,1993) the , because premium Group, the 1993). isnew higher job at offered the prless ospective coveragejob(20 than percent), at the because initial job, of athe benefits ": 0 Dynamics. Sample of full-time workers mobility rates for married men reduced" Reasons for Consolidated Omnibus Budget Reconciliation Act (COBRA) Elections, discourage a worker from leaving the current job and health insurance plan to move to a new plan that portability of health insurance may relate to the loss of health insurance benefits when a worker is workers with high hourly wages. The authors also indicate that married men who expected to 25-55 8-34 years 35-54 of age. Derived 55+ Plan Y a 1.59 percentage H.S. Some pointsCollege (result elected COBRA coverage, up from 1.7 percent in 1993 (table 1). reason were individuals aged 55 and over (8 percent), men (12 percent), and individuals with an preexisting condition (20 percent) 1991 or because 18% _ the new health 19921991 insurance cost too much 1991 1993 (19 _ • package is less generous, or selected conditions are not covered (i.e., a preexisting condition clause may does not cover 10 --'-- a given health condition)._ Selected Hearing ___10% past on reform proposals - /'__m have assumed 11% - that m 0 i in the difference" estimator for job insignificant); rates for single women 2A total of 270 companies responded to Spencer's 1994 survey, representing 1,527,648 employees. Data offered a new job that could alter his or her insurance sta $75K tus. For example, gradua if health te college insuranceor pos is t not lose coverage were 23 percent less likely to change jobs. Workers who were likely to gain disallowing or restricting preexisting condition clauses and making health insurance more portable and Millholland • Individuals , Paul. "Employers with an annual COBRA income Costs," of $20,000-$75 EBRI Notes ,000 (Novembe were most r 1992): likely 1-4. to have passed up a job annual income of less than $20,000 (12 percent). percent). While preexisting conditions are indicated as a reason for not changing jobs, the discourage a worker changes Not from offered over leaving one- the andcur three-year Less rentcoverag job and intervals, e health Preexisting insurance reduced condition plan by to 1.06 moveCost percentage to a toonew much plan points that are for the 1993 plan year. Surveys have also been conducted by the International Society of Certified Spouse/Dependent Election Employee Election or less qraduate personal would lessen job lock. offered by a prospective employer, if the worker must satisfy a waiting period before becoming eligible (insignificant); job lock effects for Employeecoverage Benefit through Specialists a change and Towe in employment rs Perrin and were the52 National percent more Association likely to of change Manufacturers. jobs as For a • Ave opportunity rage COBRA basedcosts solely were on $5,584 health, insu compared rance (2 with 3 percent) $3,903 (chart for active 2). employees, according to does existence not cover of COBRA a givenshould health mitigate condition). this as Selected an issuepast forhealth those whose care reform prospective proposals employer's have assumed Source: Employee Benefit Research Institute/Fhe Gallup Organization, Inc., Public Attitudes on Benefit Total other groups not found (wrong sign Health Insurance Portability synopsis of findings J from AgetheseI surveys, see Paul[Annual Millholland Income , ] "Employers' COBRA I _0ucaCosts," 0oo I EBRI Notes for coverage, if the benefits package offered through the prospective employer is less generous, or if the Source: Employee Benefit Research Institute/The Gallup Organization, Inc., Public Att#udes on Benefit compared with those whose insurance prospects were not :xpected to change. • In the Trade presence Offs, 1991 of COBRA, (Washington, among DC: plans Employee that Benefit will cover Research a preexisting Institute, December condition 1991; following and Public a waiting the 1994 survey. Thus, average continuation of coverage costs were 149 percent of active Mitchell, Olivia S. "Fringe Benefits and Labor Mobilitv" The Journal and insignificant). of Human Resources Results (Spring for three- (November 1992): 1-4. Survey that plan disallowing covers • In 1993, the individuals preexisting Electing or restricting most condition preexisting likely Termination following to condition respond or a waiting that clauses they period. and did Death, not making change divorce, health jobsinsurance because Termination "the more portable or Trade Offs, 1991 (Washington, DC: Employee Benefit Research Institute, December 1991); and Public Attitudes on Health Benefits, 1993 (Washington, DC: Employee Benefit Research Institute, November 1993). period, preexisting conditions are not necessarily the primary motivating reason behind individuals year intervals insignificant. employee Source: has Employee a condition Benefit that Research would beInconside stitute/The red Gallup a preexisting Organization, condition Inc., Public and would Attitudesnot on be Health covered Year Coverage reduction in hours plan ineligibility reduction in hours 1982): Attitude 286-298. s on Health Benefits, Part 1 (Washington, DC: Employee Benefit Research Institute, February 1992); • In employee looking at claims education costs, level and, , assuming individualsemployees with some electing college cove expe rage rience were were paying most 102likely percent to pass of and personal Note:prospective The would balancelessen employer's of reasons job lock. are health the following: plan costintoo 1991, much" other were (3 percent); secretarial in 1993, and other clerical (4 percent); workers Thank you for the opportunity to testify this morning. I'll be glad to answer any choosing Benefits, not 1993 to change (Washington, jobs. This DC; isEmployee because individuals Benefit Research can continue Institute, November their current 1993) coverage . for a and Public Attitudes on Health Benefits, 1993 (Washington, DC: Employee Benefit Research Institute, secure at present job (3 percent); and none of these reasons (1 percent). unde 3Inr looking the newatplan, the issue the employ of limited ee may insurop ance t to portability remain with as his a whole, or her Gruber current and employe Madrian r. Th (1994) is mayfound result November • Madrian1993). (1993) cites three factors to consider in evaluating the implications of job lock for Cooper and maximumup of a job 18-36 1987 opportunity months National even based Medical oncesolely moving Expenditure on health into by the benefits new position (26 percent), Among if they workers compared are willing likely with to to pay individuals lose 102coverage: percent the premium, employers were paying for approximately one-third (32 percent) of the total costs (percentage) questions (41 you percent) may have. and individuals who did not graduate from high school (36 percent). Individuals As of January 1994, 34 states have enacted laws that prohibit employers from imposing new Refer to charts 1 and 2 for the number of individuals who responded yes to the question, "Have you or a that continuation of coverage mandates were successful in reducing job lock. They found that one year of Note: Asked of 1,000 individuals age 18 or older from randomly generated telephone lists. Monheit (1993) Survey. Sample of wage earners 25-54 mobility for married men reduced by of the premium. Regardless of the existence of COBRA, cost, comprehensiveness of the benefit in "jobfamily lock" member or in employees ever passed for up going a job job opportunity opportunities or stayed that in acould job youpotentially would have inc preferred rease thei to leave r solely economic efficiency: Does job turnover result in a better match between workers and firms and with a high school diploma or less (16 percent) and individuals with a college or post graduate for continued coverage. Claims cost ratios ranged from 41 percent to 500 percent. Data also Mitchell, continuation least Olivia benefits likely S. "Fringe to was give associated this Benefits reason and with were thea individuals 10 Cost percent of Changing increase with an Jobs" in annual mobility Industrial income among and of $75 those Labor ,000 with or Relations more health (6 waiting because periods of years health on employees of benefits?" age. Predicted before they whether are covered workersfor preexisting 24.8%; conditions. single men These by 23%; laws married primarily 1991 100% 16.00% 7.60% 76.40% package, and availability of coverage remain important. Paul Fronstin, Research Associate insurance. productivity. Fowould r employe gain rs orwho losewant coverage employees on a new to leave job, or retirewomen and forby employ 34.7%; ees single who women would by 1992 100 10.15 8.29 81.56 Review (October education thereby increase 1983): (19 percent) 70-78. productivity? (chart 2).To the extent that job lock does lower productivity, are losses References indicate that within a given plan year, COBRA costs bear little relationship to active pertain to percent) the small andgroup individuals market with (Atchison, a postgraduate 1994). Nodegree conclusive (10 percent/. research has been done that assesses and used the results Employee in a structural Benefitprobit Research Institute 38.8%. Results significant for one- or 1993 100 15.00 13.50 71.50 • In 1993, 20 percent of surveyed Americans indicated they or a family member passed up a job prefer to change jobs, this job lock can be undesirable. Congress focused on portability of health temporary or permanent? and Is job lock a benefit or a cost for firms? model of job change. Compared their two-tail tests. 1994 employee 100 costs; COBRA costs more 7.90closely resemble individual 8.00 (as opposed to group) 84.10 plan costs the 4EBRI Atchison, impact /GalIup Lisa, of these public et al. laws opinion Major on job Health surveys mobility. Legislation are3 stratified However, in therandom in State: the 'p 93 sample resence . Washington telephone of COBRA, DC: surveys among The of George plans 1,000 that will opportunity based solely on health benefits, up from 11 percent in 1992 and 13 percent in 1991. mobility rates to the mobility rates of insurance in the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) by providing for individuals. These surveys have a maximum expected error range at the 95 percent confidence level of Individuals aged 18-34 years (28 percent) and individuals with an annual income of $20,0(0)-$75,000 • When asked in further detail the reason for not changing jobs based on health benefits, the in that they are not consistent from year to year. Monheit, Research Res Alan ultsworkers C.oand n JobPhilip whose Lock F.insurance Cooper." status Health was Insurance and Job Mobility: Theory and Evidence." Washington University, 1994. cover a preexisting condition following a waiting period, preexisting conditions are not necessarily the Source: Charles D. Spencer and Associates, Inc., "1994 COBRA Survey: One in Five Eligible Employees +3.1 percent. (23 percent) were most likely to have passed up a job opportunity based solely on health benefits. Washington, D.C. continuation of health insurance coverage. expected to remain the same. Industrial •Gruber and Labor and Madrian Relations(1994) Review found (October that continuation 1994): 68-85. of coverage mandates were successful in Takes COBRA; Employers Pay One-Third," Spencer's Research Reports (August 19, 1994). reason most often cited was that health benefits were not offered by the prospective employer In addition to public opinion surveys, several studies have been conducted regarding job primary motivating reason behind individuals choosing not to change jobs. This is because individuals This morning I will cover four points relating to the issue of health insurance portability: reducing job lock. They found that one year of continuation benefits was associated with a 10 • When asked in further detail the reason for not changing jobs based on health benefits, the reason Source: Monheit, • Among (58 Alan percent C.all and eligibles inPhilip 1991). F. electing The Cooper, likelihood coverage "Health , of15.9 Insurance this percent reasonand were declined Jobspouse Mobility: to/dependent 33 percent Theory in and elections 1993 Evidence" yet (7.9 remained percent Industrial and mobility and health insurance. The findings are mixed and do not uniformly support or refute the can Cooper, continue Philip their F.,current and Alan coverage C. Monheit. for a maximum "Does Employment-Related of 18-36 months evenHealth once moving InsuranceintoInhibit the new Job Labor Relations most often Review cited(October was that 1994): health 68-85. benefits were not offered by the prospective employer (58 percent in continuation of coverage issues through COBRA; preexisting condition provisions, price, and job lock; percent increase in mobility among those with health insurance. 12May 1995 the selected most coverage commonly because cited reason. of termination Among or other reduction reasonsincited, hours,having and 8.0 a p percent reexisting elected condition coverage Mobility?" existence ofInquiry job lock.(Winter Studies 1993): that do 400-16. support the theory of job lock show wide variation in the position if they are willing to pay 102 percent of the premium. Thus, these individuals could carry two 1991). This declined to 33 percent in 1993 yet remained the most commonly cited reason. Among other aThis figure is based on Monheit and Coopers computation based on coefficient and mean values reported by Mitchell public opinion results regarding job lock; and research results regarding job lock. reasons showed cited, having the largest a preexisting increase, condition moving fshowed rom 10 pe the rcent largest in 1991 increase, to 20 moving percent in from 1993 10(chart percent 3). in (1982). Mitchell (1983) becausedid ofnot death provide , divorce, an explicit or plan estimate ineligibility). of job-lock. Employee elections accounted for 84.1 percent plans magnitude until the of its waiting effects period based was on demographic satisfied. In and someemployment-based cases, though, the characteristics. plan may not cover Findings a from 1991 to 20 percent in 1993. • In a later publication, Monheit and Cooper (1994) found that job lock was present in the labor of all eligibles electing coverage (table 2). preexisting these studiescondition are summarized at all--with below or and without in anaaccompanying waiting period. table Regardless I will submit of thefor existence the record of COBRA, (table 3). Employee Benefit Research Institute/The Gallup Organization, Inc. "Public Attitudes on Benefit Trade Portability and COBRA market but that the proportion of workers affected and the magnitude of the welfare loss was • In addition to public opinion surveys, several studies have been conducted regarding job mobility and Offs, 1991." Report no. G-28 (Washington, DC: Employee Benefit Research Institute, December 1991). cost, comprehensiveness of the benefit package, and availability of coverage remain of importance. health insurance. The findings are mixed and do not uniformly support or refute the existence of job. The views expressed in this statement are solely those of the author and should not be attributed to the The original purpose of the coverage continuation provisions of COBRA was to assure workers less than generally supposed. • Among all spouses and dependents eligible for coverage, 9.6 percent elected coverage, compared lock. Studies that do support the theory of job lock show wide variation in the magnitude of its effects Employee Benefit Research Institute, its officers, trustees, sponsors_, or other staff. The Employee Benefit an ability to maintain health insurance during a period of transition to other coverage. COBRA based on demographic and employment-based characteristics. Research Institute is a nonprofit, nonpartisan, public policy research organization. with 37 percent in 1993, 23.4 percent in 1992, 25 percent in 1990, and 36.6 percent in 1988. Among Suite 600 ._ requires employers to offer continued health insurance coverage to employees and their dependents 2121 K Street. NW employees eligible for coverage, 19.8 percent elected coverage in 1994. Washington. DC 20037-1896 -6- -4- -2- -8- -1-5- - 202-659-0670 -3- -9- -7- Fax 202-775-6312

Volume T-98

Pages 16

EBRI Testimony

May 12, 1995

Paul Fronstin

Financial Wellbeing Health