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Tax Incentives as a Solution to the Uninsured: Evidence from the Self-Employed

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Author Info

  • Gulcin Gumus

    ()
    (Department of Health Policy and Management, Department of Economics, Florida International University, and IZA, Bonn, Germany)

  • Tracy Regan

    ()
    (Department of Economics, University of Miami)

Abstract

Between 1996 and 2003, a series of amendments were made to the Tax Reform Act of 1986 that gradually increased the tax deduction for health insurance purchases by the self-employed from 25 to 100 percent. We study how these changes have influenced the likelihood that a self-employed person has health insurance coverage as the policy holder. The Current Population Survey is used to construct a data set corresponding to 1995-2005. Both the difference-in-difference and price elasticity of demand estimates suggest that the series of tax deductions did not provide sufficient incentives for the self-employed to obtain health insurance coverage.

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File URL: http://www.bus.miami.edu/_assets/files/faculty-and-research/academic-departments/eco/eco-working-papers/wp2009-11-insurance-2008.pdf
File Function: First Version, 2006; Revised version, 2008
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Bibliographic Info

Paper provided by University of Miami, Department of Economics in its series Working Papers with number 0911.

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Length: 42 pages
Date of creation: May 2006
Date of revision: Oct 2008
Publication status: Forthcoming: Under Review
Handle: RePEc:mia:wpaper:0911

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Keywords: Health insurance; self-employment; elasticity; CPS;

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References

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  1. Helen Levy, 2006. "Health Insurance and the Wage Gap," NBER Working Papers 11975, National Bureau of Economic Research, Inc.
  2. David M. Cutler, 2002. "Employee Costs and the Decline in Health Insurance Coverage," NBER Working Papers 9036, National Bureau of Economic Research, Inc.
  3. Stephen G. Donald & Kevin Lang, 2007. "Inference with Difference-in-Differences and Other Panel Data," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 221-233, May.
  4. Gruber, Jonathan & McKnight, Robin, 2003. "Why did employee health insurance contributions rise?," Journal of Health Economics, Elsevier, vol. 22(6), pages 1085-1104, November.
  5. Brigitte C. Madrian, 2005. "The U.S. health care system and labor markets," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 50(Jun), pages 137-163.
  6. Finkelstein, Amy, 2002. "The effect of tax subsidies to employer-provided supplementary health insurance: evidence from Canada," Journal of Public Economics, Elsevier, vol. 84(3), pages 305-339, June.
  7. Holtz-Eakin, Douglas & Penrod, John R. & Rosen, Harvey S., 1996. "Health insurance and the supply of entrepreneurs," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 209-235, October.
  8. Thomas C. Buchmueller & Robert G. Valletta, 1996. "The effects of employer-provided health insurance on worker mobility," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 49(3), pages 439-455, April.
  9. Jonathan Gruber & Brigitte C. Madrian, 1994. "Health insurance and job mobility: The effects of public policy on job-lock," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 48(1), pages 86-102, October.
  10. V. Joseph Hotz & John Karl Scholz, 2006. "Examining the Effect of the Earned Income Tax Credit on the Labor Market Participation of Families on Welfare," NBER Working Papers 11968, National Bureau of Economic Research, Inc.
  11. Melissa A. Thomasson, 2000. "The Importance of Group Coverage: How Tax Policy Shaped U.S. Health Insurance," NBER Working Papers 7543, National Bureau of Economic Research, Inc.
  12. Jonathan Gruber, 2005. "Tax Policy for Health Insurance," NBER Chapters, in: Tax Policy and the Economy, Volume 19, pages 39-64 National Bureau of Economic Research, Inc.
  13. Jonathan Gruber & Brigitte C. Madrian, 2002. "Health Insurance, Labor Supply, and Job Mobility: A Critical Review of the Literature," JCPR Working Papers 255, Northwestern University/University of Chicago Joint Center for Poverty Research.
  14. Jonathan Gruber & James M. Poterba, 1993. "Tax Incentives and the Decision to Purchase Health Insurance: Evidence from the Self-Employed," NBER Working Papers 4435, National Bureau of Economic Research, Inc.
  15. Marquis, M. Susan & Long, Stephen H., 1995. "Worker demand for health insurance in the non-group market," Journal of Health Economics, Elsevier, vol. 14(1), pages 47-63, May.
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  17. Royalty, Anne Beeson & Abraham, Jean M., 2006. "Health insurance and labor market outcomes: Joint decision-making within households," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1561-1577, September.
  18. Jean Marie Abraham & William B. Vogt & Martin Gaynor, 2002. "Household Demand for Employer-Based Health Insurance," NBER Working Papers 9144, National Bureau of Economic Research, Inc.
  19. Donna B. Gilleskie & Byron F. Lutz, 1999. "The Impact of Employer-Provided Health Insurance on Dynamic Employment Transitions," NBER Working Papers 7307, National Bureau of Economic Research, Inc.
  20. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
  21. Gruber, Jonathan & Madrian, Brigitte C., 1997. "Employment separation and health insurance coverage," Journal of Public Economics, Elsevier, vol. 66(3), pages 349-382, December.
  22. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
  23. Heim, Bradley T. & Lurie, Ithai Z., 2009. "Do increased premium subsidies affect how much health insurance is purchased? Evidence from the self-employed," Journal of Health Economics, Elsevier, vol. 28(6), pages 1197-1210, December.
  24. Brigitte C. Madrian & Lars John Lefgren, 1999. "A Note on Longitudinally Matching Current Population Survey (CPS) Respondents," NBER Technical Working Papers 0247, National Bureau of Economic Research, Inc.
  25. Brigitte C. Madrian, 1993. "Employment-Based Health Insurance and Job Mobility: Is There Evidence ofJob-Lock?," NBER Working Papers 4476, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Robert W Fairlie & Kanika Kapur & Susan Gates, 2010. "Is Employer-Based Health Insurance a Barrier to Entrepreneurship?," Working Papers 200903, School Of Economics, University College Dublin.
  2. Gumus, Gulcin & Regan, Tracy L., 2009. "Self-Employment and the Role of Health Insurance," IZA Discussion Papers 3952, Institute for the Study of Labor (IZA).
  3. Heim, Bradley T. & Lurie, Ithai Z., 2010. "The effect of self-employed health insurance subsidies on self-employment," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 995-1007, December.
  4. Velamuri, Malathi, 2009. "Taxes, Health Insurance and Women's Self-Employment," MPRA Paper 50474, University Library of Munich, Germany, revised Apr 2012.
  5. Heim, Bradley T. & Lurie, Ithai Z., 2009. "Do increased premium subsidies affect how much health insurance is purchased? Evidence from the self-employed," Journal of Health Economics, Elsevier, vol. 28(6), pages 1197-1210, December.

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