Tax subsidies for health insurance: Costs and benefits

The continued rise in the uninsured population has led to considerable inte rest in tax-based policies to raise the level of insurance coverage. Using a detailed microsimulation model for evaluating these policies, we find tha t while tax subsidies could significantly increase insurance coverage, even very generous tax policies could not cover more than a sizable minority of the uninsured population. For example, a generous refundable credit that c osts $13 billion per year would reduce the ranks of the uninsured by only f our million persons. We also find that the efficiency of tax policies, in t erms of the cost per newly insured, inevitably would fall as more of the un insured were covered.