The impact of the tax system on health insurance coverage.
A central question in health economics is the extent to which this tax subsidization matters for the health insurance coverage of the U.S. population. I assess the impact of taxes on health insurance by using the considerable existing variation in tax subsidies, both at a point in time and across time. I do so by putting together data from more than a decade of Current Population Survey (CPS) data sets, and matching to workers in those data sets their tax subsidies to health insurance coverage. I find that the elasticity of insurance eligibility of workers is at least -0.6, and that the elasticity of own insurance coverage is roughly similar; the results imply that most of the impact of taxes on insurance coverage arise through firm offering and eligibility decisions. I also find that higher tax rates induce more private coverage through other sources, but less public coverage, so that overall there is a reduction in the rate of uninsurance that is comparable to the change in own employer-provided insurance coverage.
Gruber
J
J
MIT Department of Economics and NBER, 50 Memorial Drive, E52-355, Cambridge, MA 02142, USA. gruberj@mit.edu
D000328:Adult; D006302:Health Services Research; D006801:Humans; D007183:Income Tax / Q000706:statistics & numerical data*; D019458:Insurance Coverage / Q000706:statistics & numerical data*; D007348:Insurance, Health / Q000191:economics / Q000706:statistics & numerical data*; D008875:Middle Aged; D019464:Tax Exemption; D014481:United States