The Importance of Group Coverage: How Tax Policy Shaped U.S. Health Insurance / Melissa A. Thomasson.

Format:

Book

Author/Creator:

Thomasson, Melissa A.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w7543.

NBER working paper series no. w7543

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Importance of Group Coverage

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2000.

Summary:

In 1954, the Internal Revenue Service stipulated that employer contributions to the health insurance plans of their employees were to be excluded from employee taxable income. Today, the tax subsidy is major feature of the U.S. health care market. This paper examines the initial effects of the tax subsidy on the demand for health insurance using previously unexamined data from 1953 and 1958. Results suggest that the tax subsidy increased the growth of group insurance, particularly among union members and employed persons. This is a critical effect because group insurance is not only less expensive than individual insurance, but it is also easier to obtain, and households with access to group health insurance are far more likely to purchase health insurance coverage than those without similar access. By increasing access to group insurance, the tax subsidy fostered an increase in the purchase of group health insurance by people who may not have purchased individual coverage, and generated institutional change as it cemented an employment-based system of group health insurance in the United States.

Notes:

Print version record

February 2000.