Targeting Subsidies: Employers versus Individuals

Brief

Targeting Subsidies: Employers versus Individuals

Abstract

Recent congressional proposals and reforms advocated by the presidential candidates have renewed the debate about whether the problem of the uninsured is best addressed through subsidies to employers or to individuals. In this brief, the authors argue that it is more efficient to provide subsidies directly to individuals and families than to employers. Individual subsidies will lead to less displacement of private spending and will be more equitable. Employers have limited information about their workers, making employer subsidies more difficult to target to individuals with the greatest needs. In addition, employer subsidies do not eliminate the need for individual subsidies.

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