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Refundable Tax Credits for Health Insurance: The Sensitivity of Simulated Impacts to Assumed Behavior

Author

Listed:
  • David W. Emmons

    (American Medical Association)

  • Eva Madly

    (W.E. Upjohn Institute)

  • Stephen A. Woodbury

    (W.E. Upjohn Institute and Michigan State University)

Abstract

We replicate and extend a simulation model developed by Jonathan Gruber with the goals of illuminating Gruber's modeling of health insurance coverage under a tax credit and examining the sensitivity of the results to changes in the model's key parameters. The replications suggest that a refundable tax credit of $1,000 for a single individual or $2,000 for a family for private health insurance would reduce the number of uninsured individuals by between 17.5 and 28 percent and require new government expenditures of between $16.6 and $44 billion, of which about $7.4 - $9.7 billion would be for coverage of previously uninsured individuals. These wide simulated ranges highlight the uncertainty inherent in modeling the effects of health insurance tax credits and suggest that progress on the issue of tax credits for health insurance will require improved evidence on the likely take-up rate of a credit.

Suggested Citation

  • 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.
    • Handle: RePEc:upj:weupjo:05-119
    as

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    References listed on IDEAS

    as
    1. Matthew Rabin & Ted O'Donoghue, 1999. "Doing It Now or Later," American Economic Review, American Economic Association, vol. 89(1), pages 103-124, March.
    2. Gruber, Jonathan, 2000. "Microsimulation Estimates of the Effects of Tax Subsidies for Health Insurance," National Tax Journal, National Tax Association, vol. 53(n. 3), pages 329-42, September.
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    4. Paul Decker & Christopher J. O'Leary & Stephen A. Woodbury, 2001. "Participation in the Reemployment Bonus Experiments," Book chapters authored by Upjohn Institute researchers, in: Philip K. Robins & Robert G. Spiegelman (ed.), Reemployment Bonuses in the Unemployment Insurance System: Evidence from Three Field Experiments, chapter 3, pages 77-103, W.E. Upjohn Institute for Employment Research.
    5. Currie, Janet, 2004. "The Take-Up of Social Benefits," IZA Discussion Papers 1103, Institute of Labor Economics (IZA).
    6. Brigitte C. Madrian & Dennis F. Shea, 2001. "The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(4), pages 1149-1187.
    7. Jonathan Gruber, 2000. "Tax Subsidies for Health Insurance: Evaluating the Costs and Benefits," NBER Working Papers 7553, National Bureau of Economic Research, Inc.
    8. Pauly Mark V. & Herring Bradley & Song David, 2002. "Tax Credits, the Distribution of Subsidized Health Insurance Premiums, and the Uninsured," Forum for Health Economics & Policy, De Gruyter, vol. 5(1), pages 1-22, January.
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    10. repec:mpr:mprres:3116 is not listed on IDEAS
    11. 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.
    12. Dahlia K. Remler & Jason E. Rachlin & Sherry A. Glied, 2001. "What can the take-up of other programs teach us about how to improve take-up of health insurance programs?," NBER Working Papers 8185, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    health; insurance; Gruber; tax; credit; Woodbury; Emmons; Upjohn;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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