In the U.S., where employers provide most private health insurance coverage, changing employers nearly always means changing health insurance providers.

(a) Why might the health insurer at a new job balk at providing insurance to a job-switching employee, or charge a high price?

b.)Explain why the health insurer at the old job would not also drop coverage or charge a higher price in any given year. Hint: Discuss the observability of any changes to the employee by insurers and legal restrictions.

c) Describe the nature of the welfare loss arising from this sort of “job lock.” Be sure to consider the following question in your answer: under what conditions can it be economically efficient for employees quit their jobs?

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