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Health Insurance Tax Credits, The Earned Income Tax Credit, And Health Insurance Coverage Of Single Mothers

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  • Merve Cebi
  • Stephen A. Woodbury

Abstract

The Omnibus Budget Reconciliation Act of 1990 enacted a refundable tax credit for low‐income working families who purchased health insurance coverage for their children. This health insurance tax credit (HITC) existed during tax years 1991, 1992, and 1993, and was then rescinded. A difference‐in‐differences estimator applied to Current Population Survey data suggests that adoption of the HITC, along with accompanying increases in the Earned Income Tax Credit (EITC), was associated with a relative increase of about 4.7 percentage points in the private health insurance coverage of working single mothers with high school or less education. Also, a difference‐in‐difference‐in‐differences estimator, which attempts to net out the possible influence of the EITC increases but which requires strong assumptions, suggests that the HITC was responsible for about three‐quarters (3.6 percentage points) of the total increase. The latter estimate implies a price elasticity of health insurance take‐up of −0.42. Copyright © 2013 John Wiley & Sons, Ltd.

Suggested Citation

  • 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.
    • Handle: RePEc:wly:hlthec:v:23:y:2014:i:5:p:501-515
    DOI: 10.1002/hec.2928
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    2. Dajung Jun, 2018. "Effectiveness of tax credits for health insurance premium: Evidence from the health insurance tax credit," Health Economics, John Wiley & Sons, Ltd., vol. 27(10), pages 1609-1616, October.
    3. Otto Lenhart, 2019. "The effects of income on health: new evidence from the Earned Income Tax Credit," Review of Economics of the Household, Springer, vol. 17(2), pages 377-410, June.

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    More about this item

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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