Households in which changes in the number of children during the sample period move them from the control to the treatment group are dropped from the analysis, which is consistent with previous work using longitudinal data by Averett and Wang (2013). The effect of lottery prizes on physical and mental health. Income Thresholds for Cost-Free Health Care, Medications and/or Beneficiary Travel Eligibility. Additionally, the panel nature of the PSID allows me to account for potential changes in the composition of the sample following the increase of EITC benefits. In order to further test for the validity of the main results of the study, estimates for several additional robustness checks are presented in Table 6. In 2020, data collection faced extraordinary circumstances due to the onset of the COVID-19 pandemic as the Census Bureau suspended in-person interviews and closed both telephone contact centers. Evans and Garthwaite (2014) mention that a potential misclassification of individuals who are treated in the pre-treatment period should bias the observed estimates in this study against finding any health impacts. The Gini index based on post-tax income fell 3.1% from .442 in 2019 to .428 in 2020. pp. The estimates for both outcomes are small and statistically insignificant, which provides further suggestive evidence that reverse causality does not bias the main results of this study. Grossman, M. (1972). (2013) provide evidence that certain aspects of the welfare reforms can lead to increased mortality rates. Figure 1 shows changes in the share of individuals who report either excellent or very good health across during the period of the study for the sample of individuals that were eligible to receive EITC benefits throughout the pre-expansion period.Footnote 8 The graph provides evidence that, while health status was relatively similar for the two groups before the policy change, individuals with two or more children are more likely to report being in either excellent or very good health following the expansion of the EITC. In their report, Aron and her colleagues cite data from the Centers for Disease Control and Prevention showing. Quarterly Journal of Economics, 127(3), 10571106. Public Finance Review, 39(5), 432436. Of the subtypes of health insurance, employment-based insurance was the most common subtype, covering 54.4% of the population for some or all of the calendar year. Evans and Garthwaite (2014) show that expansions of the federal EITC not only improved self-reported health but also lessened the count of risky biomarkers in low-educated mothers, indicating reductions in stress. Policy implications of the gradient of health and wealth. Learn more. Unemployment insurance benefits, also expanded during 2020, prevented 5.5 million people from falling into poverty. Why update your application with income changes? (2005). https://doi.org/10.1002/hec.3658. Given that the HITC, which was only in place until 1993, had very low take-up rates, and had the same eligibility criteria for households with one or at least two children, the insurance estimates should not be affected by the HITC. The statistics show that the policy change in the mid-1990s substantially altered the credit rates and benefits to eligible families. Furthermore, by using state identifiers provided in the PSID, I am able to simulate both state-level and federal EITC benefits.Footnote 3, In order to obtain treatment effects on the treated, the sample is limited to heads of households with at least one child who, based on the TAXSIM simulations, are eligible to receive EITC benefits.Footnote 4 Consistent with findings in the literature showing that 8087% of eligible households indeed receive the credit (IRS 2002; Scholz 1994), this study assumes full take-up rates (Dahl and Lochner 2012). America is a leader in medical innovation. In Cutler, D. M. & Garber, A. M. The poverty rate for families with a male householder was 11.4% in 2020, not statistically different from 2019. How Income Affects Health - Business Insider Low-income communities are also more likely to be in urban heat islands parts of cities where the temperature is higher than the surrounding areas. Given that the PSID only offers two pre-treatment periods with information on food expenditures, the second sample in Table 7 consists of households that received EITC benefits at least twice both before and after the policy change. When examining potential channels underlying the relationship between income and health, I find that affected household increase their food expenditures by 10.5 to 20.3 percent and are 1.52 percent more likely to have health insurance coverage. The study finds that income improves the likelihood of affected heads of households reporting to be in excellent or very good health by 6.9 to 8.9 percentage points. American Journal of Epidemiology, 183(9), 775784. (2015), and Evans and Garthwaite (2014). Kenkel, D. S., Schmeiser, M. D., & Urban, C. (2014). AARP is a nonprofit, nonpartisan organization that empowers people to choose how they live as they age. B. Additionally, the SPM deducts necessary expenses for critical goods and services from income. ", Morbidity & Mortality Weekly Report: "Annual Out-of-Pocket Expenditures and Financial Hardship Among Cancer Survivors Aged 18-64 Years United States, 2011-2016," "Vital Signs: Racial Disparities in Age-Specific Mortality Among Blacks or African Americans United States, 1999-2015. 2003; Lindahl 2005; Adda et al. The effect of welfare reform on prenatal care and birth weight. McGranahan, L., Schanzenbach, D. W. (2013). Diet and exercise: People who eat a well-balanced diet, who exercise, and don't smoke live longer than those who don't follow these healthy habits. Produced and distributed by the Survey Research Center, Institute for Social Research. (pp. Secure .gov websites use HTTPS I find that higher EITC payments lead to significant improvements in self-assessed health, while changes in food expenditures and insurance coverage are shown to be likely mechanisms underlying the relationship between income and health. 2002; Currie and Stabile 2003; Adda et al. Duchovny, N. J. Consistent with the Grossman model of the demand for health (1972), investments in health such as lifestyle, exercising or diet can positively affect ones stock of health. Relatively few employers vary cost-sharing or premium contribution with a workers income. ", Brookings Institution: Closing the racial wealth gap requires heavy, progressive taxation of wealth., Cancer Medicine: "Overall survival, adverse events, and economic burden in patients with chronic lymphocytic leukemia receiving systemic therapy: Real-world evidence from the Medicare population. Health insurance tax credits and health insurance coverage of low-earning single mothers. Spending toward premium contribution and out-of-pocket medical costs is higher for families with at least one member in worse health across all income groups. First, I conduct a falsification test that compares the health outcomes of heads of households from two groups that are equally affected by the policy change. Journal of Human Resources, 40(2), 309334. To my knowledge, this is the first study that examines the role of changes in food expenditures as a potential channel through which higher EITC benefits might affect health. Furthermore, researchers have investigated the impacts of the program on labor force participation (Eissa and Liebman 1996; Meyer and Rosenbaum 2001; Hotz and Scholz 2003; Eissa et al. (2015) find a 3.6 percentage point increase in private insurance, while Baughman (2005) estimates increases in employer-sponsored health insurance by 3.8 percentage points following the expansions of the EITC in the mid-1990s. Among people with employer-based coverage, the share of family incomes spent on health insurance premium contributions and payments for medical care vary considerably by income. I additionally re-estimate the propensity scores using the two other commonly used estimation techniques for propensity scores, logit and cloglog estimation. Provided by the Springer Nature SharedIt content-sharing initiative, The effects of income on health: new evidence from the Earned Income Tax Credit, $$\begin{array}{l}{\mathrm{Y}}_{{\mathrm{it}}}{\mathrm{ = \beta }}_{\mathrm{0}}{\mathrm{ + \beta }}_{\mathrm{1}}{\mathrm{2KIDS}}_{{\mathrm{it}}}{\mathrm{ + \beta }}_{\mathrm{2}}{\mathrm{X}}_{{\mathrm{it}}}{\mathrm{ + \delta }}_{{\mathrm{DD}}}{\mathrm{POST}}_{{\mathrm{it}}} \ast {\mathrm{2KIDS}}_{{\mathrm{it}}}\\ {\mathrm{ + \lambda }}_{\mathrm{1}}{\mathrm{Year + \lambda }}_{\mathrm{2}}{\mathrm{State + \alpha }}_{\mathrm{i}}{\mathrm{ + \varepsilon }}_{{\mathrm{it}}}{\mathrm{,}}\end{array}$$, $$\begin{array}{l}{\mathrm{Y}}_{{\mathrm{it}}}{\mathrm{ = \beta }}_{\mathrm{0}}{\mathrm{ + \beta }}_{\mathrm{1}}{\mathrm{POST}}_{{\mathrm{it}}}{\mathrm{ + \beta }}_{\mathrm{2}}{\mathrm{2KIDS}}_{{\mathrm{it}}}{\mathrm{ + \beta }}_{\mathrm{3}}{\mathrm{ELIG}}_{{\mathrm{it}}}{\mathrm{ + \beta }}_{\mathrm{4}}{\mathrm{POST}}_{{\mathrm{it}}} \ast {\mathrm{2KIDS}}_{{\mathrm{it}}}\\ {\mathrm{ + \beta }}_{\mathrm{5}}{\mathrm{POST}}_{{\mathrm{it}}} \ast {\mathrm{ELIG}}_{{\mathrm{it}}}{\mathrm{ + \beta }}_{\mathrm{6}}{\mathrm{ELIG}}_{{\mathrm{it}}} \ast {\mathrm{2KIDS}}_{{\mathrm{it}}}{\mathrm{ + \beta }}_{\mathrm{7}}{\mathrm{X}}_{{\mathrm{it}}}{\mathrm{ + \delta }}_{{\mathrm{DDD}}}{\mathrm{POST}}_{{\mathrm{it}}}\\ \ast {\mathrm{ELIG}}_{{\mathrm{it}}} \ast {\mathrm{2KIDS}}_{{\mathrm{it}}}{\mathrm{ + \lambda }}_{\mathrm{1}}{\mathrm{State + \alpha }}_{{\mathrm{i + }}}{\mathrm{\varepsilon }}_{{\mathrm{it}}}{\mathrm{,}}\end{array}$$, $$E\left[ {Y^1\left( 1 \right) - Y^0\left( 1 \right)\left| {D = 1} \right.} I have Obamacare, and my annual income without the withdrawal is approximately $32,000. Milbank Quarterly, 89(4), 694727. In additional specification, I estimate treatment effects separately for males and females. She points to the Earned Income Tax Credit (EITC) and the more recent Child Tax Credit as examples of programs that are helping people rise out of poverty. While no statistically significant effects are noticeable for any of the welfare reform controls, the effects shown in Table 4 could potentially be lower bound effects since previous work has provided evidence for negative effects of welfare reform on health (Muennig et al. PDF Guide to Confirming Your Income Information - Centers for Medicare The other two specifications examine whether health status can predict the amount of EITC eligibility as well as the likelihood of benefiting from the EITC expansion. This finding provides additional evidence for the positive link between income and health.Footnote 14. AARP Membership $12 for your first year when you sign up for Automatic Renewal. The number of low-income housing units in flood zones is expected to triple over the next 3 decades due to climate change. The degree of financial protection from high health care costs varies considerably across employer plans and by family income. Given that there is a close link between income and food insecurity, additional income in the hands of vulnerable groups of the population could affect their levels of food security. The main dependent variable is self-reported health status, which is categorized on a scale from 1 (excellent) to 5 (poor). Table 4 reports the DD fixed effect estimates of the impact of receiving additional income through the EITC expansion on the health outcomes of heads of households. For example: Health insurance: Fewer than one-third of low-income workers have health insurance, compared to nearly 60% of higher-income workers. 2017). ", FREOPP.org: "United States #6 in the 2021 World Index of Healthcare Innovation. A potential explanation for the gender differences across the two groups is that single mothers represent 31% of EITC recipients and 41% of EITC funds (Meyer 2007). Fifth, besides estimating DD models, I test for the robustness of the findings by additionally estimating several other specifications. Review of Economics of the Household, 16(3), 661680. Federal Reserve Bank of Chicago Working Paper 20132014. Heads of households with missing information on their health status are removed from the analysis as well, whereas the sample is restricted to individuals less than 65 years of age.Footnote 5. The results remain similar to the main specification for the other two samples. Journal of Health Economics, 26, 213232. U.S. Government Accountability Office (1994). Were living life every day. Fletcher, J., & Wolfe, B. Employee costs and the decline in health insurance coverage. Factors that Affect Health Insurance Costs - ObamaCare Facts And they're less likely to have health insurance or access to preventive care. State Earned Income Tax Credits and the production of child health: insurance coverage, utilization, and health status. National Tax Journal, 47(1), 5981. Boyd-Swan, C., Herbst, C. M., Ifcher, J., & Zarghamee, H. (2016). Averett, S., and Wang, Y. A number of studies have so far addressed whether the established positive association between income and health reflect a causal relationship by estimating instrumental variable models to account for the potential endogeneity of income. Her first worry was, "Where do I go from here?" Social Science and Medicine, 16, 369380. They will simply check a box on their return to indicate that everyone listed on the front of the return has qualifying health care coverage for the entire year. The method captures average treatment effects for the treated group (ATT) for the case that differences in observed characteristics create non-parallel outcome dynamics between the two observed groups, which violates the main assumption of standard DD models. Your expert will only sign and file your return if they believe it's 100% correct and you are getting your best outcome possible. Schmeiser, M. D. (2009). Stress might even reshape your genes by shortening part of your chromosomes called telomeres. Cost of living - latest updates: Huge drop in UK house - Sky News Third, increases in income as well as income security might lead to changes in health-related behaviors, such as timely receipt of medical, and changes in smoking and drinking, which in turn influence health outcomes for children and adults. My income has since gone down. Again, while only small differences in EITC benefits are observable before the expansion for families with one child and those with two or more children, the gap becomes large in the years after the policy change. Table 1 provides an overview of the EITC parameters for families with one and two or more children during the time period of the study. Finkelstein et als (2012) LATE estimate indicates a 24.3 percent increase in the likelihood of reporting excellent, very good or good health status. After being in place for only three years, the HITC, which provided credits of up to $465 (Cebi and Woodbury 2009), was effectively repealed on 31 December 1993. If you receive too much, you typically will need to pay it back. It has been shown to be a good predictor of other health outcomes, including mortality (Idler and Benyamini 1997), future health care usage (van Doorslaer et al. Low-income workers offered health insurance through their employer are typically not eligible for subsidies on the Affordable Care Act Marketplaces, even if they would face lower costs to buy coverage and with reduced cost sharing. Quarterly Journal of Economics, 111(2), 431466. While it appears reasonable that both these channels likely play a role underlying the link between the EITC and health outcomes, other factors such as changes in health behaviors or financial stress could furthermore explain the findings to some extent and should be examined in future work. Using the EITC to help poor families: new evidence and a comparison with the minimum wage. There is considerable evidence of increased access to health care and reduced medical debt. Card, D., Dobkin, C., & Maestas, N. (2009). In their work on the Oregon Health Insurance Experiment, Finkelstein et al. American Economic Review, 92(5), 13081334. The structure of the policy changes offers the opportunity for a difference-in-differences (DD) framework to observe the average treatment effects. VA Aid and Attendance Threshold. The Affordable Care Act can help provide insurance, but only if you can afford to pay for it. The cost of employer-sponsored health insurance has been steadily increasing over the past decade; premiums are up 47% anddeductiblesare up 92% from 2011 to 2021. Neumark, D., & Wascher, W. (2001). (2010). The main part of this study uses data from the Panel Study of Income Dynamics (PSID), a nationally representative longitudinal sample of households and families interviewed annually since 1968 and biannually since 1997. Income gradient in health-related quality of life the role of social A family is related people living in the same household. For simple tax returns only Hamad, R., & Rehkopf, D. H. (2016). The effects of welfare reform on the academic performance of children in low-income households. The Hamilton Project: Policies to Address Poverty in America: 112. This increase was due to growth in the number of people age 65 and over. The official poverty rate in 2020 was 11.4%, up 1.0 percentage point from 2019. For consistency with past reports, the income and poverty estimates in the Income and Poverty in the United States: 2020 report are based on the concept of money income, which is pretax and does not include stimulus payments and tax credits. Another Census Bureau report,The Supplemental Poverty Measure: 2020, was also released today. The ATT is given by the following equation: where Y(1) and Y(0) represent health outcomes before and after the treatment, D is an indicator for belonging to the treatment group, P(D=1) gives the probability of receiving treatment, and P(D=1 | X) is the propensity score that equals the probability of treatment, conditional on the observed covariates X. The response rate for the CPS basic household survey was 73% in March 2020, about 10 percentage points lower than preceding months and the same period in 2019, which were regularly above 80%. The SPM permits the examination of the effects of government transfers on poverty estimates. The EITC was introduced in an attempt to reward work rather than to provide guaranteed income, while aiming at moving families beyond the poverty line. The annual cost to treat CLL is about $106,000. Please enable Javascript in your browser and try Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business. (2012) find that low-income adults who gained Medicaid coverage through the lottery are significantly more likely to report better physical health in the year after the lottery. Not until very recently have researchers started examining potential effects of the program on health outcomes. These findings are representative of 136 million non-elderly people with job-based coverage, including more than 9 million with family incomes of less than twice poverty and another 36 million with incomes between 200 and 400 percent of poverty. Given that the EITC provides incentives for low-income individuals to enter the labor force, the use of longitudinal data helps account for differences in the composition of sample before and after an expansion of the program. Miller, A. R., & Zhang, L. (2009). The estimated equation in the DDD model is the following: where ELIGit is an indicator for whether a family is eligible to receive any EITC benefits during the year of the survey. Health Effects of Unemployment | U.S. News ", Internal Revenue Service: "Earned Income Tax Credit (EITC). On average, heads of EITC-eligible households with at least two children are more likely to be male and married, while those with one child are slightly older in the least restricted sample (only EITC in pre-period). Beginning in 2011, the ASEC began collecting information from respondents on the amounts they pay for health insurance premiums and out-of-pocket costs for medical care, which we use to measure average spending by people at different levels of poverty. 2 provides graphical motivation for using the EITC expansion to examine the causal link between income and health. This study also examines the role of health insurance in explaining potential changes in health outcomes following the expansion of the EITC by estimating the effects on overall coverage as well as on different insurance types. While some find no evidence that income leads to improved physical health (Meer et al. We find that people in lower-income families with employer coverage spend a greater share of their income on health costs than those with higher incomes, and that the health status of family members is associated with higher health-related expenses. The following instruments for income and wealth have been used by researchers in the past: parental education, work experience, spousal characteristics (Ettner 1996), inheritances (Meer et al. How Does Income Affect Monthly Medicare Premiums? - AARP In that time, there was a 0.5 percentage-point increase in Medicare coverage. The analysis shows that health benefits were largest for people in the plateau phase of the EITC, which provides further evidence that the health improvements are the result of increases in income. Finally, these models also control for state-level unemployment rates and whether state-level EITC benefits are in place on top of the federal credit (please see the full list of additional control variables in the Appendix). . Figure 3 shows the average amounts of EITC, which individuals from the groups used in the falsification test, are eligible to receive benefits based on my TAXSIM simulations. Dowd and Horowitz (2011) show that the EITC is often only a short-term safety nets for low-income households by providing evidence that 61 percent of recipients only claim the EITC for one or two years. Cumulative receipt of an anti-poverty tax credit for families did not impact tobacco smoking among parents. There was a time when a job at the local factory offered a lifetime of financial security and benefits. Like any DD model, the estimation of equation (1) makes the key assumption that trends in health outcomes over time are similar across both the treatment and control groups. Strully, K. W., Rehkopf, D. H., & Xuan, Z. The Marketplace will count their income only if they're required to file a federal tax return. For example, Averett and Wang (2013) find a gap $320 in benefits between families with one or at least two children. Does Income Affect Life Insurance Rates? - Life Ant To my knowledge, three previous papers have investigated the potential impacts of changes to EITC on fertility. Journal of Health and Social Behavior, 38, 2137. They also have higher death rates from all causes. The authors declare that they have no conflict of interest. Another source of endogeneity is the potential for reverse causality, which occurs if changes in health outcomes affect peoples income. Similar to Baughman (2005), Hoynes et al. Abadie, A. What's included as income | HealthCare.gov There are 9 individuals that switched from the control to the treatment group (99 observations) and 19 individuals who switched from the control to the treatment group (209 observations). Panel Study of Income Dynamics, Public Use Dataset. Firstly, people need a certain level of income to be able to afford the basics for a healthy life, such as food and quality housing. It seems likely that all members of the household will be affected by potential increases in food expenditures. National Tax Journal, 55(1), 2540. This is the first statistically significant decline in median household income since 2011. While the magnitude of these effects suggest that food expenditures and health insurance are able to explain how additional income can lead to health improvements, it seems likely that income affects health in several ways.
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