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

Published:September 07, 2016DOI:https://doi.org/10.1016/j.amepre.2016.07.001

      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.
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