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Small Firm Size and Health Insurance: A Private Enterprise Perspective

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  • Richard J. Cebula

    (Jacksonville University)

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.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Richard J. Cebula, 2008. "Small Firm Size and Health Insurance: A Private Enterprise Perspective," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 24(Fall 2008), pages 51-77.
    • Handle: RePEc:jpe:journl:591
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    References listed on IDEAS

    as
    1. David M. Cutler, 1994. "A Guide to Health Care Reform," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 13-29, Summer.
    2. Richard C. Lindrooth & Gloria J. Bazzoli & Jan Clement, 2007. "The Effect of Reimbursement on the Intensity of Hospital Services," Southern Economic Journal, John Wiley & Sons, vol. 73(3), pages 575-587, January.
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    5. Paul Macavoy, 2003. "“Don't just stand there...” treasury secretary William E. Simon and fiscal policy during stagflation 1975–76," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 31(3), pages 213-218, September.
    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. 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, Springer;International Atlantic Economic Society, vol. 29(2), pages 186-202, June.
    8. Richard Cebula, 2006. "A Further Analysis of Determinants of Health Insurance Coverage," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 12(3), pages 382-389, August.
    9. Nathan J. Ashby, 2007. "Economic Freedom and Migration Flows between U.S. States," Southern Economic Journal, John Wiley & Sons, vol. 73(3), pages 677-697, January.
    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. Belton, Willie & Cebula, Richard, 1992. "Budget Deficits and Economic Growth," MPRA Paper 61413, University Library of Munich, Germany.
    12. Joseph P. Newhouse, 1994. "Symposium on Health Care Reform," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 3-11, Summer.
    13. 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.
    14. 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.
    15. Guy David & Lorens A. Helmchen, 2007. "The Choice of Employment Arrangement in the Market for Hospitalist Services," Southern Economic Journal, John Wiley & Sons, vol. 73(3), pages 604-622, January.
    16. Kan, Kamhon, 2007. "Cigarette smoking and self-control," Journal of Health Economics, Elsevier, vol. 26(1), pages 61-81, January.
    17. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    18. Wagstaff, Adam, 2007. "The economic consequences of health shocks: Evidence from Vietnam," Journal of Health Economics, Elsevier, vol. 26(1), pages 82-100, January.
    19. David M. Cutler & Jonathan Gruber, 1996. "Does Public Insurance Crowd out Private Insurance?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(2), pages 391-430.
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    21. 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.
    22. 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.
    23. Kevin Frick & Anthony Bopp, 2005. "Poverty: Insurance Theory and the Medically Uninsured," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 33(4), pages 451-459, December.
    24. John Holahan & Len M. Nichols & Linda J. Blumberg & Yu-Chu Shen, 2003. "A New Approach to Risk-Spreading via Coverage-Expansion Subsidies," American Economic Review, American Economic Association, vol. 93(2), pages 277-282, May.
    25. Office of Health Economics, 2007. "The Economics of Health Care," For School 001490, Office of Health Economics.
    26. repec:kap:iaecre:v:12:y:2006:i:3:p:382-389 is not listed on IDEAS
    27. Mary A. Burke & Gary M. Fournier & Kislaya Prasad, 2007. "The Diffusion of a Medical Innovation: Is Success in the Stars?," Southern Economic Journal, John Wiley & Sons, vol. 73(3), pages 588-603, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Small Enterprises; Health Insurance; Tax Incentives; Credit Incentives; Private Enterprises;
    All these keywords.

    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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