Cost Effectiveness of the Earned Income Tax Credit as a Health Policy Investment

Am J Prev Med. 2016 Dec;51(6):874-881. doi: 10.1016/j.amepre.2016.07.001. Epub 2016 Sep 7.

Abstract

Introduction: Lower-income Americans are suffering from declines in income, health, and longevity over time. Income and employment policies have been proposed as a potential non-medical solution to this problem.

Methods: An interrupted time series analysis of state-level incremental supplements to the Earned Income Tax Credit (EITC) program was performed using data from 1993 to 2010 Behavioral Risk Factor Surveillance System surveys and state-level life expectancy. The cost effectiveness of state EITC supplements was estimated using a microsimulation model, which was run in 2015.

Results: Supplemental EITC programs increased health-related quality of life and longevity among the poor. The program costs about $7,786/quality-adjusted life-year gained (95% CI=$4,100, $13,400) for the average recipient. This ratio increases with larger family sizes, costing roughly $14,261 (95% CI=$8,735, $19,716) for a family of three.

Conclusions: State supplements to EITC appear to be highly cost effective, but randomized trials are needed to confirm these findings.

Publication types

  • Research Support, Non-U.S. Gov't

MeSH terms

  • Cost-Benefit Analysis
  • Health Policy / economics*
  • Income Tax*
  • Poverty
  • State Government
  • United States