Tax Credits, the Distribution of Subsidized Health Insurance Premiums, and the Uninsured

30 Pages Posted: 3 Sep 2001 Last revised: 24 Oct 2010

See all articles by Mark V. Pauly

Mark V. Pauly

University of Pennsylvania - Health Care Systems Department; National Bureau of Economic Research (NBER)

Bradley Herring

Emory University - Department of Health Policy and Management

David Song

University of Pennsylvania - Health Care Systems Department

Date Written: September 2001

Abstract

This paper investigates the impact of a $1000 refundable tax credit for self-only coverage on net premiums and insurance purchases for a representative sample of potential buyers in the individual insurance market. Two methods are used to estimate the distribution of premiums: predicted premiums based on a sample of actual purchasers, and premium quotations drawn from an e-insurance web site. In most of the simulations, the net premiums for half or more of the prospective buyers are reduced to zero or low levels. The number of uninsured is reduced by between 21 percent and 85 percent depending on the size of the deductible in the benchmark plan. However, the results are sensitive to assumptions about insurer underwriting practices.

Suggested Citation

Pauly, Mark V. and Herring, Bradley and Song, David, Tax Credits, the Distribution of Subsidized Health Insurance Premiums, and the Uninsured (September 2001). NBER Working Paper No. w8457. Available at SSRN: https://ssrn.com/abstract=281862

Mark V. Pauly (Contact Author)

University of Pennsylvania - Health Care Systems Department ( email )

3641 Locust Walk
208 Colonial Penn Center
Philadelphia, PA 19104-6358
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Bradley Herring

Emory University - Department of Health Policy and Management ( email )

1518 Clifton Road NE
Atlanta, GA 30322
United States

David Song

University of Pennsylvania - Health Care Systems Department ( email )

3641 Locust Walk
Colonial Penn Center
Philadelphia, PA 19104-6358
United States

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