Tax Incentives as a Solution to the Uninsured: Evidence from the Self-Employed

Gulcin Gumus and Tracy Regan

No 2866, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Between the years 1996 and 2003, a series of amendments were made to the Tax Reform Act of 1986 (TRA86) that gradually increased the tax credit for health insurance purchases by the self-employed from 25 to 100 percent. We study how these changes in the tax code have influenced the likelihood that a self-employed person has health insurance coverage as the policy holder of the plan. The Current Population Survey (CPS) is used to construct a data set corresponding to 1995-2005. The empirical analysis is performed for prime-age men and women, and accounts for differences in family structure and potential eligibility. The difference-in-difference estimates suggest that the series of tax credits did not provide sufficient incentives for the self-employed to obtain health insurance coverage. Estimates of the price elasticity of demand confirm the limited response to changes in the after-tax health insurance premium. The effect was largest, however, among the single men and women in our sample, suggesting that a 10 percent decrease in the after-tax price increases the likelihood of coverage by 0.68 and 1.02 percentage points, respectively.

Keywords: elasticity; self-employment; health insurance; CPS (search for similar items in EconPapers)
JEL-codes: I11 J32 J48 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2007-06
New Economics Papers: this item is included in nep-hea, nep-ias and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published - revised version published in : Inquiry , 2013, 50 (4), 275-295.

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Related works:
Working Paper: Tax Incentives as a Solution to the Uninsured: Evidence from the Self-Employed (2008)
Working Paper: Tax Incentives as a Solution to the Uninsured: Evidence from the Self-Employed (2007)
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