Effectiveness of tax credits for health insurance premium: Evidence from the health insurance tax credit

With the push to repeal the Affordable Care Act, there is renewed interest in using tax credits to increase health insurance coverage. Another tax credit-driven policy, the Health Insurance Tax Credit (HITC), was implemented during 1991-1993. To date, only one paper has analyzed the effectiveness of the HITC on coverage rates. In this paper, I reexamine the effectiveness of the HITC by using the Survey of Income Program Participation and provide the first estimates of its effects on utilization and self-reported health status. Despite using the different data set, I find a similar result regarding coverage as the previous paperthe effect of the HITC was about 5.8 percentage points. I also find that self-reported health was significantly improved because of the HITC. I conclude by discussing the implications of these findings on the larger debate regarding current health care reform.