Premium Subsidies for Low-Wage Workforce: What Is An Appropriate Price Point?
Publication Date: June 2004
Publisher(s): Insure the Uninsured Project
The majority of California's uninsured are young, low-income workers (Brown, 2000). Premium assistance programs targeted to this subgroup are intended to minimize the number of uninsured by inducing employers to offer health insurance and increasing employee take-up and individual purchase. Research to date has found that in order for premium assistance programs to be effective, the subsidy must be large, appropriately target beneficiaries and take into account disparities in health costs associated with age and gender. A major challenge has been determining the size of credit sufficient to encourage employer offering and individual employee take-up.
The following analysis provides an overview of current research evaluating the advantages and disadvantages of premium subsidies and the impact of premium subsidies or tax credits on increasing employer offering of insurance, employee take-up and individual purchase. Based on analysis of the literature gathered and observed outcomes of pilot premium assistance programs in California, a premium subsidy in the amount of 50% seems likely to result in the greatest impact in decreasing the number of uninsured.