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Refundable Tax Credits for Health Insurance: The Sensitivity of Simulated Impacts to Assumed Behavior

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  • David W. Emmons

    (American Medical Association)

  • Eva Madly

    (W.E. Upjohn Institute)

  • Stephen A. Woodbury

    ()
    (W.E. Upjohn Institute and Michigan State University)

Abstract

We replicate and extend a simulation model developed by Jonathan Gruber with the goals of illuminating Gruber's modeling of health insurance coverage under a tax credit and examining the sensitivity of the results to changes in the model's key parameters. The replications suggest that a refundable tax credit of $1,000 for a single individual or $2,000 for a family for private health insurance would reduce the number of uninsured individuals by between 17.5 and 28 percent and require new government expenditures of between $16.6 and $44 billion, of which about $7.4 - $9.7 billion would be for coverage of previously uninsured individuals. These wide simulated ranges highlight the uncertainty inherent in modeling the effects of health insurance tax credits and suggest that progress on the issue of tax credits for health insurance will require improved evidence on the likely take-up rate of a credit.

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Bibliographic Info

Paper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number 05-119.

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Date of creation: Jul 2005
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Handle: RePEc:upj:weupjo:05-119

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Keywords: health; insurance; Gruber; tax; credit; Woodbury; Emmons; Upjohn;

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  1. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December.
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  3. Mark V. Pauly & Bradley Herring & David Song, 2002. "Tax Credits, the Distribution of Subsidized Health Insurance Premiums, and the Uninsured," NBER Chapters, in: Frontiers in Health Policy Research, Volume 5, pages 103-122 National Bureau of Economic Research, Inc.
  4. Gruber, Jonathan, 2000. "Microsimulation Estimates of the Effects of Tax Subsidies for Health Insurance," National Tax Journal, National Tax Association, vol. 53(n. 3), pages 329-42, September.
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  6. O'Donoghue, Ted & Rabin, Matthew, 1997. "Doing It Now or Later," Department of Economics, Working Paper Series qt7t44m5b0, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  7. Janet Currie, 2004. "The Take Up of Social Benefits," NBER Working Papers 10488, National Bureau of Economic Research, Inc.
  8. Brigitte C. Madrian & Dennis F. Shea, 2001. "THE POWER OF SUGGESTION: INERTIA IN 401(k) PARTICIPATION AND SAVINGS BEHAVIOR," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1149-1187, November.
  9. Jonathan Gruber, 2000. "Tax Subsidies for Health Insurance: Evaluating the Costs and Benefits," NBER Working Papers 7553, National Bureau of Economic Research, Inc.
  10. 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.
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