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Small Firm Size and Health Insurance: A Private Enterprise Perspective

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  • Cebula, Richard

Abstract

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.

Suggested Citation

  • Cebula, Richard, 2007. "Small Firm Size and Health Insurance: A Private Enterprise Perspective," MPRA Paper 50939, University Library of Munich, Germany, revised 10 Apr 2007.
  • Handle: RePEc:pra:mprapa:50939
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    References listed on IDEAS

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    1. 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.
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    6. 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.
    7. Joseph P. Newhouse, 1994. "Symposium on Health Care Reform," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 3-11, Summer.
    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. 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.
    10. 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.
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    19. repec:kap:iaecre:v:12:y:2006:i:3:p:382-389 is not listed on IDEAS
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    More about this item

    Keywords

    health insurance; small firms hypothesis; mandating policies; tax-credit policies;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H49 - Public Economics - - Publicly Provided Goods - - - Other
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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