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The Macroeconomics of Health Savings Accounts

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  • Juergen Jung

    ()
    (Towson University)

  • Chung Tran

    ()
    (Indiana University Bloomington)

Abstract

We analyze whether a consumer driven health care plan like the newly established Health Savings Accounts (HSAs) can reduce health care expenditures in the United States and increase the fraction of the population with health insurance. Unlike previous literature, our analysis relies on a dynamic general equilibrium framework with heterogenous agents. We endogenize health care expenditure and insurance choice, so that the model fully accounts for feedback effects from both factor markets and insurance markets. We then highlight the importance of including general equilibrium effects into the policy analysis. Specifically, our results from numerical simulations indicate that the success of HSAs depends critically on the productivity of health and the annual contribution limit to HSAs. In addition, we find that taxpayers can face substantial costs when HSAs are introduced to insure more people and to curb aggregate health expenditures.

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Bibliographic Info

Paper provided by Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington in its series Caepr Working Papers with number 2007-023.

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Length: 52 pages
Date of creation: Apr 2008
Date of revision:
Handle: RePEc:inu:caeprp:2007023

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Keywords: Health Savings Accounts; Consumer Driven Health Care Plans; Health Insurance; Privatization of Health Care; General Equilibrium Health Uncertainty Model; Numerical Simulation of Health Care Reform;

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Citations

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Cited by:
  1. Juergen Jung & Chung Tran, 2014. "Market Inefficiency, Insurance Mandate and Welfare: U.S. Health Care Reform 2010," Working Papers 2014-01, Towson University, Department of Economics, revised Feb 2014.
  2. Juergen Jung & Chung Tran, 2010. "The Macroeconomics of Health Savings Accounts," Working Papers 2010-12, Towson University, Department of Economics, revised May 2011.
  3. Hui He & Hao Zhang & Tim Halliday, 2010. "Health Investment over the Life-Cycle," 2010 Meeting Papers 1179, Society for Economic Dynamics.
  4. Kai Zhao, 2014. "Social Security and the Rise in Health Spending," Working papers 2014-04, University of Connecticut, Department of Economics.
  5. Zhao, Kai, 2011. "Social security and the rise in health spending: a macroeconomic analysis," MPRA Paper 34203, University Library of Munich, Germany.
  6. Juergen Jung & Chung Tran, 2011. "The Extension of Social Security Coverage in Developing Countries," Working Papers 2011-06, Towson University, Department of Economics, revised Nov 2011.
  7. Zhigang Feng, 2009. "Macroeconomic Consequences of Alternative Reforms to the Health Insurance System in the U.S," Working Papers 0908, University of Miami, Department of Economics.
  8. Hui He & Kevin x.d. Huang, 2013. "Why Do Americans Spend So Much More on Health Care than Europeans?--A General Equilibrium Macroeconomic Analysis," Vanderbilt University Department of Economics Working Papers 13-00005, Vanderbilt University Department of Economics.

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