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Microsimulation Estimates of the Effects of Tax Subsidies for Health Insurance

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  • Gruber, Jonathan

Abstract

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 policies, and its findings for the impact of policies 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 that 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.

Suggested Citation

  • Gruber, Jonathan, 2000. "Microsimulation Estimates of the Effects of Tax Subsidies for Health Insurance," National Tax Journal, National Tax Association;National Tax Journal, vol. 53(3), pages 329-342, September.
    • Handle: RePEc:ntj:journl:v:53:y:2000:i:3:p:329-42
    DOI: 10.17310/ntj.2000.3.01
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    File URL: https://doi.org/10.17310/ntj.2000.3.01
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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 05-119, W.E. Upjohn Institute for Employment Research.
    2. Merve Cebi & Stephen A. Woodbury, 2014. "Health Insurance Tax Credits, The Earned Income Tax Credit, And Health Insurance Coverage Of Single Mothers," Health Economics, John Wiley & Sons, Ltd., vol. 23(5), pages 501-515, May.
    3. Jonathan Gruber, 2003. "Evaluating Alternative Approaches to Incremental Health-Insurance Expansion," American Economic Review, American Economic Association, vol. 93(2), pages 271-276, May.

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