The effect of tax subsidies to employer-provided supplementary health insurance: evidence from Canada

Content Provider	Semantic Scholar
Author	Finkelstein, Amy
Copyright Year	2002
Abstract	Abstract This paper presents new evidence of the effect of the tax subsidy to employer-provided health insurance on coverage by such insurance. I study the effects of a 1993 tax change that reduced the tax subsidy to employer-provided supplementary health insurance in Q by almost 60%. Using a differences-in-differences methodology in which changes in Q are compared to changes in other provinces not affected by the tax change, I find that this tax change was associated with a decrease of about one-fifth in coverage by employer-provided supplementary health insurance in Q. This corresponds to an elasticity of employer coverage with respect to the tax price of about −0.5. Non-group supplementary health insurance coverage rose slightly in Q relative to other provinces in response to the reduction in the tax subsidy to employer-provided (group) coverage. But the increase in the non-group market offset only 10–15% of the decrease in coverage through an employer. The decrease in coverage through an employer was especially pronounced in small firms, where the tax subsidy appears much more critical to the provision of supplementary health insurance than it does in larger firms.
Starting Page	305
Ending Page	339
Page Count	35
File Format	PDF HTM / HTML
DOI	10.1016/S0047-2727(00)00155-9
Volume Number	84
Alternate Webpage(s)	http://economics.mit.edu/files/773
Alternate Webpage(s)	https://doi.org/10.1016/S0047-2727%2800%2900155-9
Language	English
Access Restriction	Open
Content Type	Text
Resource Type	Article