Working Paper: NBER ID: w12733
Authors: John F. Cogan; R. Glenn Hubbard; Daniel P. Kessler
Abstract: In this paper, we calculate the consequences for health spending and federal revenues of an above-the-line deduction for out-of-pocket health spending. We show how the response of spending to this expansion in the tax preference can be specified as a function of a small number of behavioral parameters that have been estimated in the existing literature. We compare our estimates to those from other researchers. And, we use our analysis to derive some implications for tax policy toward HSAs.
Keywords: tax preferences; health care spending; federal revenues; health savings accounts
JEL Codes: H2; H5; I1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| tax preference for employer-provided health insurance (I13) | overconsumption of health services (H51) |
| tax preference for employer-provided health insurance (I13) | health spending (H51) |
| changes in tax policy (H29) | health spending levels (H51) |
| changes in tax policy (H29) | behavioral responses (D91) |
| behavioral responses (D91) | health spending levels (H51) |
| tax preference for out-of-pocket health spending (H51) | health spending behavior (H51) |
| tax preference for out-of-pocket health spending (H51) | efficiency (D61) |