Employer Offers, Private Coverage, and the Tax Subsidy for Health Insurance: 1987 and 1996

Economists have long been interested in the effect of tax-based subsidies on private health insurance coverage. We examine this relationship using pooled data from the 1987 National Medical Expenditure Survey and the 1996 Medical Expenditure Panel Survey. Our main tax price elasticity estimates for...

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Bibliographic Details
Published in:International journal of health care finance and economics 2002-11, Vol.2 (4), p.297-318
Main Authors: Bernard, Didem, Selden, Thomas M.
Format: Article
Language:English
Subjects:
Adult
Coefficients
Consumer Behavior - economics
Decision making
Elasticity of demand
Employees
Employer provided health insurance
Employers
Employment
Estimated taxes
Female
Health Benefit Plans, Employee - economics
Health Benefit Plans, Employee - statistics & numerical data
Health care expenditures
Health economics
Health expenditures
Health insurance
Health risks
Health Services Research
Humans
Income Tax - legislation & jurisprudence
Income taxes
Insurance Coverage
Male
Middle Aged
Models, Econometric
Polls & surveys
Price elasticity
Private Sector
Risk sharing
Salaries and Fringe Benefits - statistics & numerical data
Social security tax
State income tax
Studies
Subsidies
Tax Exemption - legislation & jurisprudence
Tax incentives
Tax rates
Tax subsidies
Taxation
United States
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Summary:Economists have long been interested in the effect of tax-based subsidies on private health insurance coverage. We examine this relationship using pooled data from the 1987 National Medical Expenditure Survey and the 1996 Medical Expenditure Panel Survey. Our main tax price elasticity estimates for employer offers and for private coverage are near the mid-point of the existing literature. However, these estimates may mask substantial differences in tax-price responsiveness across subsets of workers. Our more disaggregated analysis reveals tax price responsiveness to be significantly above average for low-income workers, workers with low health risks, and workers in small firms--precisely those groups whose continued participation in employment-related risk pooling is of greatest policy concern. In addition, we present family-level elasticities that allow for joint decision-making in two-worker families.
ISSN:1389-6563
2199-9023
1573-6962
2199-9031
DOI:10.1023/A:1022360202017