The Impact of Insurance Subsidies on Self‐Employment: Do State Non‐Group Health Insurance Regulations Matter?

16 Pages Posted: 19 Jan 2013

See all articles by Bradley T. Heim

Bradley T. Heim

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA)

Ithai Lurie

U.S. Department of the Treasury, Office of Tax Analysis (OTA)

Date Written: January 2013

Abstract

This paper tests whether the effect of tax‐based subsidies for self‐employed health insurance on the level of self‐employment differs with the type of non‐group insurance regulatory regime at the state level. Using a panel of tax returns from 1999 to 2004, we estimate fixed effects instrumental variable regressions for the probability of being self‐employed, allowing the effect of the after‐tax price of self‐employed health insurance to differ by regulatory regime. Our results suggest that states with community rating and guaranteed issue regulations had significantly smaller increases in the fraction of taxpayers reporting some amount of self‐employment income as a result of a decrease in the after‐tax price of self‐employed health insurance. However, there is suggestive evidence that heavily regulated states experienced a larger increase in exclusive self‐employment, particularly among older taxpayers.

JEL Classification: J24, H24, I18

Suggested Citation

Heim, Bradley T. and Lurie, Ithai, The Impact of Insurance Subsidies on Self‐Employment: Do State Non‐Group Health Insurance Regulations Matter? (January 2013). Contemporary Economic Policy, Vol. 31, Issue 1, pp. 94-109, 2013, Available at SSRN: https://ssrn.com/abstract=2203289 or http://dx.doi.org/10.1111/j.1465-7287.2011.00291.x

Bradley T. Heim

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States

Ithai Lurie

U.S. Department of the Treasury, Office of Tax Analysis (OTA) ( email )

1500 Pennsylvania Ave., N.W.
Washington, DC 22203
United States

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