State Health Insurance Subsidies and the Self-Employed

Dennis Barber III, Maurice Moffett

Abstract


Many of the studies addressing the effectiveness of health insurance subsidies on the take-up rate of the self-employed have focused on either federal policies, such as TRA86 and OECSA, or the federal policies in combination with state policies. We are interested in isolating the effects of the state subsidy programs on take up rates. We are also interested in determining whether state health insurance subsidies have increased the probability that an individual would choose to become self-employed. Using a difference-in-difference-in-difference approach, this natural experiment isolates the effects of the state policies from the federal policy effects by comparing a group of states that subsidize the cost of health insurance with a group of similar states that have not implemented such policies. We find that a self-employed individual in the treatment states was more likely to be covered by private insurance after the state subsidized the cost of health insurance. However, we do not find that the subsidies increased the probability that an individual would choose to become self-employed.


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 University of Houston-Clear Lake