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Small Firm Size and Health Insurance: A Private Enterprise Perspective

  • Cebula, Richard

This study has two objectives. First, it proffers and then empirically investigates what is being identified as the "small firm hypothesis," i.e., a hypothesis that the greater the percentage of firms in the U .S. that are "small," the greater the percentage of the population that can be expected to be without health insurance. The study adopts the percentage of private firms with 20 or fewer employees as the measure/ definition of "small firms." The empirical analysis adopts state-level data and finds, after controlling for a variety of other factors, strong empirical support for the small firm hypothesis. Second, with this as the backdrop, this study seeks to critique public policies in the forms of (1) mandated universal health insurance coverage (mandating) and (2) tax-credit incentive policies intended to reduce the percent of the population without health insurance. The study then compares said policies to a private enterprise perspective and finds no compelling evidence of a market failure in the health insurance market. Mandating and tax-credit policies are not only unnecessary but also would create myriad negative economic effects for the economy and jeopardize the private enterprise system.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 50939.

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Date of creation: 17 Jan 2007
Date of revision: 10 Apr 2007
Publication status: Published in The Journal of Private Enterprise 1.24(2008): pp. 51-77
Handle: RePEc:pra:mprapa:50939
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  1. Richard Cebula, 2006. "A Further Analysis of Determinants of Health Insurance Coverage," International Advances in Economic Research, International Atlantic Economic Society, vol. 12(3), pages 382-389, August.
  2. Katherine Swartz, 2003. "Reinsuring Risk to Increase Access to Health Insurance," American Economic Review, American Economic Association, vol. 93(2), pages 283-287, May.
  3. Mary A. Burke & Gary M. Fournier & Kislaya Prasad, 2007. "The Diffusion of a Medical Innovation: Is Success in the Stars?," Southern Economic Journal, Southern Economic Association, vol. 73(3), pages 588–603, January.
  4. Paul Macavoy, 2003. "“Don't just stand there...” treasury secretary William E. Simon and fiscal policy during stagflation 1975–76," Atlantic Economic Journal, International Atlantic Economic Society, vol. 31(3), pages 213-218, September.
  5. David M. Cutler, 1994. "A Guide to Health Care Reform," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 13-29, Summer.
  6. Ellis, Randall P. & McGuire, Thomas G., 2007. "Predictability and predictiveness in health care spending," Journal of Health Economics, Elsevier, vol. 26(1), pages 25-48, January.
  7. repec:oup:qjecon:v:111:y:1996:i:2:p:391-430 is not listed on IDEAS
  8. Cebula, Richard, 1996. "An Empirical Note on the Impact of the Federal Budget Deficit on Ex Ante Real Long-Term, Interest Rates, 1973-1995," MPRA Paper 51414, University Library of Munich, Germany.
  9. Mukhtar Ali & H. Cecil & James Knoblett, 2001. "The effects of tax rates and enforcement policies on taxpayer compliance: A study of self-employed taxpayers," Atlantic Economic Journal, International Atlantic Economic Society, vol. 29(2), pages 186-202, June.
  10. Cebula, Richard J., 1995. "The impact of federal government budget deficits on economic growth in the united states: an empirical investigation, 1955-1992," International Review of Economics & Finance, Elsevier, vol. 4(3), pages 245-252.
  11. Wagstaff, Adam, 2007. "The economic consequences of health shocks: Evidence from Vietnam," Journal of Health Economics, Elsevier, vol. 26(1), pages 82-100, January.
  12. Guy David & Lorens A. Helmchen, 2007. "The Choice of Employment Arrangement in the Market for Hospitalist Services," Southern Economic Journal, Southern Economic Association, vol. 73(3), pages 604–622, January.
  13. Nathan J. Ashby, 2007. "Economic Freedom and Migration Flows between U.S. States," Southern Economic Journal, Southern Economic Association, vol. 73(3), pages 677–697, January.
  14. Kamhon Kan, 2006. "Cigarette smoking and self-control," IEAS Working Paper : academic research 06-A004, Institute of Economics, Academia Sinica, Taipei, Taiwan.
  15. Richard C. Lindrooth & Gloria J. Bazzoli & Jan Clement, 2007. "The Effect of Reimbursement on the Intensity of Hospital Services," Southern Economic Journal, Southern Economic Association, vol. 73(3), pages 575–587, January.
  16. Harris, Katherine M. & Keane, Michael P., 1998. "A model of health plan choice:: Inferring preferences and perceptions from a combination of revealed preference and attitudinal data," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 131-157, November.
  17. Kevin Frick & Anthony Bopp, 2005. "Poverty: Insurance Theory and the Medically Uninsured," Atlantic Economic Journal, International Atlantic Economic Society, vol. 33(4), pages 451-459, December.
  18. Norman Thurston, 1999. "On the decline of employment-based health insurance in the US," Applied Economics Letters, Taylor & Francis Journals, vol. 6(10), pages 683-686.
  19. Richard J. Cebula, 2005. "Recent empirical evidence on the impact of the primary budget deficit on nominal longer term treasury note interest rate yields," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 7(1), pages 47-58.
  20. Joseph P. Newhouse, 1994. "Symposium on Health Care Reform," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 3-11, Summer.
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