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- Pashchenko, Svetlana & Porapakkarm, Ponpoje (2013): Cross-subsidization in employer-based health insurance and the effects of tax subsidy reform
A major source of insurance coverage for non-elderly adults in the US is employer-based health insurance market. ... However, people have different incentives to participate in the employer-based pool - since premiums are independent of individual risk, high-risk individuals receive implicit cross-subsidies from low-risk individuals. ... We construct a general equilibrium heterogeneous agents model and calibrate it using the Medical Expenditure Panel Survey Dataset. We find that even though the complete elimination of the tax subsidy leads to the unraveling of the employer-based pool, there is still room for substantial savings by targeting the tax subsidy. More specifically, the same level of risk-sharing in the employer-based market can be achieved at one third of the current costs if i) the tax subsidy is targeted only towards low-risk people who have weak incentives to participate in the pool, and ii) employer-based insurance premiums become age-adjusted.
RePEc:pra:mprapa:48054 Save to MyIDEAS - Pashchenko, Svetlana & Porapakkarm, Ponpoje (2013): Cross-subsidization in employer-based health insurance and the effects of tax subsidy reform
A major source of insurance coverage for non-elderly adults in the US is the employer-based health insurance market. Every participant in this market receives a tax subsidy because premiums are excluded from taxable income. However, people have different incentives to participate in the employer-based pool - since premiums are independent of individual risk, high-risk individuals receive implicit cross-subsidies from low-risk individuals. ... Using a general equilibrium heterogeneous agents model, we find that even though the complete elimination of the tax subsidy leads to the unraveling of the employer-based pool, there is still room for substantial savings by targeting the tax subsidy. More specifically, the same level of risk-sharing in the employer-based market can be achieved at one- third of the current costs if i) the tax subsidy is targeted only towards low- risk individuals who have weak incentives to participate in the pool, and ii) employer-based insurance premiums become age-adjusted.
RePEc:pra:mprapa:72671 Save to MyIDEAS - Svetlana Pashchenko & Ponpoje Porapakkarm (2016): Cross-Subsidization in Employer-Based Health Insurance and the Effects of Tax Subsidy Reform
Every individual buying employer-based health insurance receives a tax subsidy because premiums are excluded from taxable income. Since these premiums are independent of individual risk, high-risk individuals also receive implicit crosssubsidies from low-risk individuals. In this paper, we explore ways to reform the tax subsidy by taking this implicit cross-subsidization into account. Using a general equilibrium model, we find that targeting the tax subsidy can result in substantial savings. Specifically, the same level of risk-sharing can be achieved at one-third of current costs if the tax subsidy is targeted only toward low-risk individuals and premiums are age-adjusted.
RePEc:ntj:journl:v:69:y:2016:i:3:p:583-612 Save to MyIDEAS - Ponpoje (Poe) Porapakkarm & Svetlana Pashchenko (2013): Cross-subsidization in employer-based health insurance and the effects of tax subsidy reform
A major source of insurance coverage for non-elderly adults in the US is employer-based health insurance market. Every participant of this market gets a tax subsidy since premiums are excluded from taxable income. ... We construct a general equilibrium heterogeneous agents model and calibrate it using Medical Expenditure Panel Survey Dataset. We find that even though the complete elimination of the tax subsidy leads to the unraveling of the employer-based pool there is a room for substantial savings by targeting the tax subsidy. More specifically, the same level of risk-sharing in the employer-based market can be achieved at only one third of the current costs.
RePEc:red:sed013:1086 Save to MyIDEAS