Small Firm Size and Health Insurance: A Private Enterprise Perspective

Richard Cebula ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study has two objectives. First, it proffers and then empirically investigates what is being identified as the "small firm hypothesis," i.e., a hypothesis that the greater the percentage of firms in the U .S. that are "small," the greater the percentage of the population that can be expected to be without health insurance. The study adopts the percentage of private firms with 20 or fewer employees as the measure/ definition of "small firms." The empirical analysis adopts state-level data and finds, after controlling for a variety of other factors, strong empirical support for the small firm hypothesis. Second, with this as the backdrop, this study seeks to critique public policies in the forms of (1) mandated universal health insurance coverage (mandating) and (2) tax-credit incentive policies intended to reduce the percent of the population without health insurance. The study then compares said policies to a private enterprise perspective and finds no compelling evidence of a market failure in the health insurance market. Mandating and tax-credit policies are not only unnecessary but also would create myriad negative economic effects for the economy and jeopardize the private enterprise system.

Keywords: health insurance; small firms hypothesis; mandating policies; tax-credit policies (search for similar items in EconPapers)
JEL-codes: H25 H31 H49 I13 (search for similar items in EconPapers)
Date: 2007-01-17, Revised 2007-04-10
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Published in The Journal of Private Enterprise 1.24(2008): pp. 51-77

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:50939

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