Private health insurance is instrumental in preventing mass early retirement among workers from single and dual-earner households.

Job lock may result from circumstances in which an individual would prefer to retire but continues working in order to obtain employer-provided health insurance coverage. In their review of the health insurance and retirement literature, Gruber and Madrian (2004) found solid empirical support across multiple studies that health insurance affects retirement decisions. Specifically, they reported that the availability of health insurance after one has retired (i.e., retiree health insurance) increases the odds of retirement by 30–80%. These findings were consistent across various empirical methods, models, and datasets. Older workers, and particularly those who are less healthy or more in need of healthcare, may be less willing to retire from a job that offers health insurance if insurance would otherwise not be available, be very expensive, or offer less coverage. Prior to the U.S. Affordable Care Act of 2010 (ACA) and recent changes to U.S. health insurance policy, 90% of individuals with private health insurance obtained coverage through their employment or employment of a family member (Gruber & Madrian, 2004). One of the provisions of the ACA was to require that employers make policies available to their workers.

In the U.S., age 65 is significant because it is the age when all Americans become eligible for health insurance through Medicare. This has implications for health insurance-related job lock. For example, Cutler (2002) studied older workers in the U.S. who were financially and psychologically ready to retire but remained employed in order to retain employer-provided health insurance until reaching the age of eligibility for Medicare. A review of this literature concluded that health insurance is indeed an important factor related to whether and when individuals retire, especially for secondary earners (who are predominantly married women; Fisher et al., 2016; Gruber & Madrian, 2004; Murasko, 2008). Specifically, this research has found that among households with dual earners, one spouse may work primarily to obtain employer-provided health insurance or supplementary insurance for the household. Relevant to the aims of the present study, they also found that there was very little research on the welfare effects of this outcome (Gruber & Madrian, 2002). Rashad and Sarpon (2008) conducted a literature review and concluded that there is evidence of health-insurance related job lock in the U.S. They presented empirical results using data from the National Health Interview Survey (NHIS) to study individuals with health insurance in which they compared those with and without employer-provided health insurance. Individuals with employer-provided health insurance were less likely to leave a job and more likely to stay on the job longer than those with other sources of health insurance. Boyle and Lahey (2010) found that new access to non-employer provided health insurance decreases full-time work and increases part-time employment among older workers. More research is needed to build our understanding of employer-provided health insurance and labor mobility, particularly given the passage of the ACA.