Gruber, Jonathan. "Microsimulation Estimates of the Effects of Tax Subsidies for Health Insurance."
National Tax Journal,  September 2000, part 1

For discussion in class Wednesday, February 14th

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1. What is the normative goal of this paper? In what way does the author think that that goal is not being met?
2. What does the author mean by "incremental" reforms? Does the author think that incremental are desirable? If so, for economic reasons or political ones?
3. Why does it matter if a credit or deduction is used? Why does it matter if the credit is refundable or not? Which method seems most desirable, and why?
4. Name one advantage and one drawback of either capping the subsidy or limiting the subsidy by income. (Most plausible answers apply to both.)
5. Why do you think the author does not give any of the details of the technical model that underlies the analysis?
6. What are the features of the base case insurance subsidy that the author considers?
7. Explain each of the key findings the author lists on page 333, and decide whether they are strengths or weaknesses of the base policy.
8. Why is the author concerned with distributional analysis of the subsidy policy? Is the subsidy most effective at helping the poor, the rich, or the middle class get insurance?
9. In Table 3, the author considers several alternatives to the base policy. Which of these do you think is the best alternative? What are the normative goals that you think justifies the choice of this policy over the others? (I will call several people to answer this question.)
10. The author says on page 341, "we have not considered in any detail either pricing reactions in the non-group market nor state and/or federal regulatory reactions to this type of policy." What type of reactions does the author think might occur, and what problems does this cause for the analysis?