TY  - JOUR
AU  - Gruber,Jonathan
TI  - Tax Subsidies for Health Insurance: Evaluating the Costs and Benefits
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7553
PY  - 2000
Y2  - February 2000
UR  - http://www.nber.org/papers/w7553
L1  - http://www.nber.org/papers/w7553.pdf
N1  - Author contact info:
Jonathan Gruber
MIT Department of Economics
E52-355
50 Memorial Drive
Cambridge, MA 02142-1347
Tel: 617/253-8892
Fax: 617/253-1330
E-Mail: gruberj@mit.edu
AB  - 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 polices, and its findings for the impact of polices 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 which 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.
ER  -