Is Health Insurance Elastic Or Inelastic? 
I believe that health insurance is neither elastic or inelastic . The amount of insurance most people purchase has little to do with the actual cost of the coverage . In most cases the person making the purchase decision is not the individual paying for the coverage . People can pay widely different amounts for the very same level of coverage . When the coverage is purchased through work the person 's employer is making a portion of the premium payments on behalf of the employee . Any remaining contribution is paid for by the employee using pretax payroll deductions . The IRS is then picking up a portion of the tab in the form of a tax subsidy . When individuals purchase coverage through a state exchange they may be eligible for premium and cost sharing subsidies . The subsidies are based upon the household 's income compared to the federal poverty level . 