Tax Subsidies for Health Insurance: Evaluating the Costs and Benefits
The continued rise in the number of non-elderly Americans without health insurance has led to considerable interest in tax-based policies to raise the level of insurance coverage. This paper describes a detailed microsimulation model that has been developed to evaluate such tax-based polices, and its findings for the impact of polices on government costs and insurance coverage. I find that while tax subsidies could significantly increase insurance coverage, even very generous tax policies could not cover more than a sizable minority of the uninsured population. But there are several design features which can clearly make tax policy more effective: using tax credits rather than deductions; making credits refundable; and addressing the timing mismatch between when insurance purchases are made and tax refunds are received. I also document a clear tradeoff between the scope of tax subsidies and their efficiency.
|Date of creation:||Feb 2000|
|Date of revision:|
|Publication status:||published as Gruber, Jonathan and Larry Levitt. "Tax Subsidies For Health Insurance: Costs And Benefits," Health Affairs, 2000, v19(1,Feb), 72-85.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-77, June.
- Jeffrey B. Liebman, 1998. "The Impact of the Earned Income Tax Credit on Incentives and Income Distribution," NBER Chapters, in: Tax Policy and the Economy, Volume 12, pages 83-120 National Bureau of Economic Research, Inc.
- Farber, Henry S. & Levy, Helen, 2000.
"Recent trends in employer-sponsored health insurance coverage: are bad jobs getting worse?,"
Journal of Health Economics,
Elsevier, vol. 19(1), pages 93-119, January.
- Henry S. Farber & Helen Levy, 1998. "Recent Trends in Employer-Sponsored Health Insurance Coverage: Are Bad Jobs Getting Worse?," NBER Working Papers 6709, National Bureau of Economic Research, Inc.
- David M. Cutler & Jonathan Gruber, 1996. "Does Public Insurance Crowd out Private Insurance?," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 391-430.
- 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.
- Royalty, Anne Beeson, 2000. "Tax preferences for fringe benefits and workers' eligibility for employer health insurance," Journal of Public Economics, Elsevier, vol. 75(2), pages 209-227, February.
- Jonathan Gruber, 1998. "Health Insurance and the Labor Market," NBER Working Papers 6762, National Bureau of Economic Research, Inc.
- David M. Cutler & Sarah J. Reber, 1998. "Paying for Health Insurance: The Trade-Off between Competition and Adverse Selection," The Quarterly Journal of Economics, Oxford University Press, vol. 113(2), pages 433-466.
- Shore-Sheppard, Lara & Buchmueller, Thomas C. & Jensen, Gail A., 2000. "Medicaid and crowding out of private insurance: a re-examination using firm level data," Journal of Health Economics, Elsevier, vol. 19(1), pages 61-91, January.
- Pauly, Mark V, 1986. "Taxation, Health Insurance, and Market Failure in the Medical Economy," Journal of Economic Literature, American Economic Association, vol. 24(2), pages 629-75, June.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:7553. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.