The Effect of Tax Credits for Nongroup Insurance on Health Spending by the Uninsured

Feb. 25, 2004
Health Affairs , Web Exclusive, Feb. 25, 2004.
James D. Reschovsky, Jack Hadley

This paper compares 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.