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

Author Info

Listed author(s):
  • 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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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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P.O. Box 248126, Coral Gables, FL 33124-6550

Phone: (305) 284-5540
Fax: (305) 284-2985
Web page: http://www.bus.miami.edu/faculty-and-research/academic-departments/economics/index.html

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

Other versions of this item:

Find related papers by JEL classification:
  • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
  • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
  • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

References listed on IDEAS
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  1. 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.
  2. Melissa A. Thomasson, 2003. "The Importance of Group Coverage: How Tax Policy Shaped U.S. Health Insurance," American Economic Review, American Economic Association, vol. 93(4), pages 1373-1384, September.
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  7. Daniel Feenberg & Elisabeth Coutts, 1993. "An introduction to the TAXSIM model," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(1), pages 189-194.
  8. David M. Cutler, 2003. "Employee Costs and the Decline in Health Insurance Coverage," NBER Chapters,in: Frontiers in Health Policy Research, Volume 6, pages 27-54 National Bureau of Economic Research, Inc.
  9. 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.
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  18. repec:pri:cepsud:85rosen is not listed on IDEAS
  19. 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.
  20. Brigitte C. Madrian, 1994. "Employment-Based Health Insurance and Job Mobility: Is there Evidence of Job-Lock?," The Quarterly Journal of Economics, Oxford University Press, vol. 109(1), pages 27-54.
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  25. Jonathan Gruber & James Poterba, 1994. "Tax Incentives and the Decision to Purchase Health Insurance: Evidence from the Self-Employed," The Quarterly Journal of Economics, Oxford University Press, vol. 109(3), pages 701-733.
  26. 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.
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  30. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-338, May.
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Cited by:

  1. Fossen, Frank M. & König, Johannes, 2015. "Public health insurance and entry into self-employment," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112934, Verein für Socialpolitik / German Economic Association.
  2. Gulcin Gumus & Tracy Regan, 2007. "Self-Employment and the Role of Health Insurance," Working Papers 0910, University of Miami, Department of Economics.
  3. Fairlie, Robert W. & Kapur, Kanika & Gates, Susan, 2011. "Is employer-based health insurance a barrier to entrepreneurship?," Journal of Health Economics, Elsevier, vol. 30(1), pages 146-162, January.
  4. Velamuri, Malathi, 2009. "Taxes, Health Insurance and Women’s Self-Employment," MPRA Paper 15731, University Library of Munich, Germany.
  5. 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.
  6. 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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