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Tax Credits, the Distribution of Subsidized Health Insurance Premiums, and the Uninsured


  • Mark V. Pauly
  • Bradley Herring
  • David Song


This paper investigates the impact of a $1000 refundable tax credit for self-only coverage on net premiums and insurance purchases for a representative sample of potential buyers in the individual insurance market. Two methods are used to estimate the distribution of premiums: predicted premiums based on a sample of actual purchasers, and premium quotations drawn from an e-insurance web site. In most of the simulations, the net premiums for half or more of the prospective buyers are reduced to zero or low levels. The number of uninsured is reduced by between 21 percent and 85 percent depending on the size of the deductible in the benchmark plan. However, the results are sensitive to assumptions about insurer underwriting practices.

Suggested Citation

  • Mark V. Pauly & Bradley Herring & David Song, 2001. "Tax Credits, the Distribution of Subsidized Health Insurance Premiums, and the Uninsured," NBER Working Papers 8457, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:8457
    Note: HC

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    Cited by:

    1. David W. Emmons & Eva Madly & Stephen A. Woodbury, 2005. "Refundable Tax Credits for Health Insurance: The Sensitivity of Simulated Impacts to Assumed Behavior," Upjohn Working Papers and Journal Articles 05-119, W.E. Upjohn Institute for Employment Research.
    2. Mark V. Pauly & Bradley Herring & David Song, 2002. "Health Insurance on the Internet and the Economics of Search," NBER Working Papers 9299, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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