Microsimulation Estimates of the Effects of Tax Subsidies for Health Insurance

Jonathan Gruber

National Tax Journal, 2000, vol. 53, issue 3, 329-42

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.

Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:53:y:2000:i:3:p:329-42

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