2016 Articles

Cost Effectiveness of the Earned IncomeTax Credit as a Health Policy Investment

Muennig, Peter A.; Mohit, Babak; Wu, Jinjing; Rosen, Zohn; Jia, Haomiao

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 nonmedical 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% CI¼$4,100, $13,400) for the average recipient. This ratio increases with larger family sizes, costing roughly $14,261 (95% CI¼$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.