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

Working Paper No. 8457 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:...

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Bibliographic Details
Published inNBER Working Paper Series p. 8457
Main Authors Pauly, Mark V, Herring, Bradley, Song, David
Format Paper
LanguageEnglish
Published Cambridge National Bureau of Economic Research, Inc 01.09.2001
Subjects
Economic theory
Insurance premiums
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Summary:Working Paper No. 8457 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.
ISSN:0898-2937
DOI:10.3386/w8457