Health Insurance, Taxes, and Twenty-Somethings: The Economic Irrelevance of Tax Policy Framing Effects

• In Event: Behavioral Tax Research

Abstract

The Affordable Care Act of 2010 employs an array of personal income tax credits and penalties to encourage and enforce its mandate for minimum essential health insurance coverage. The mandate seeks to achieve dual goals of comprehensive coverage and cost containment for a healthcare system that has long battled issues of adverse selection. The ultimate success of this initiative depends largely on participation from young adults who are relatively healthy, historically reluctant to seek private health insurance, and who have voiced significant concerns over the expected costs and benefits of obtaining mandated coverage. Consistent with these rational economic concerns, we find in an experimental setting that so-called “young invincibles” are not motivated by the frame or salience of tax incentives offered, but instead base their decisions to purchase insurance on the net expected benefit of coverage and the perceived likelihood of illness or injury.

Authors

• Shane Ryan Stinson, University of Alabama-Tuscaloosa

• Michaele Lizabeth Morrow, suffolk university

• Marcus M. Doxey, University of Alabama-Tuscaloosa