Working Paper: NBER ID: w13767
Authors: John F. Cogan; R. Glenn Hubbard; Daniel P. Kessler
Abstract: In this paper, we estimate the effect of the tax preference for health insurance on health care spending using data from the Medical Expenditure Panel Surveys from 1996-2005. We use the fact that Social Security taxes are only levied on earnings below a statutory threshold to identify the impact of the tax preference. Because employer-sponsored health insurance premiums are excluded from Social Security payroll taxes, workers who earn just below the Social Security tax threshold receive a larger tax preference for health insurance than workers who earn just above it. We find a significant effect of the tax preference, consistent with previous research.
Keywords: Tax Preferences; Health Spending; Employer-Sponsored Insurance
JEL Codes: H21; I11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Tax preference for employer-sponsored health insurance (I13) | Health care spending (H51) |
| Social Security payroll tax threshold (H55) | Tax preference for employer-sponsored health insurance (I13) |