Health Affairs

Posting date: February 25, 2004

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Health Affairs, 10.1377/hlthaff.w4.113
Copyright © 2004 by Project HOPE

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The Effect Of Tax Credits For Nongroup Insurance On Health Spending By The Uninsured

James D. Reschovsky ^1* Jack Hadley ²

¹ James Reschovsky is a senior health researcher at the Center for Studying Health System Change in Washington, D.C.
² Jack Hadley is a senior fellow at the Center for Studying Health System Change and a principal research associate at the Urban Institute, also in Washington, D.C.

^*Corresponding author.

Abstract

We compare out-of-pocket spending for health care by lower-income uninsured people with their net spending on insurance and health care if they took up each of three hypothetical tax credits. Because of nongroup policies’ high cost and low benefits, nearly all would spend more, often much more, under a tax credit similar to that proposed by the Bush administration. When viewed in the context of other research on low-income people’s demand for health insurance, the results suggest that sizable reductions in the number of uninsured will require more generous tax credits than those in current proposals.

Key Words: Access To Care, Business Of Health, Health Reform, Insurance - Employer-Based System, Insurance Coverage, Health Spending

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