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The Effect of Tax Preferences on Health Spending

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Author Info
John F. Cogan
R. Glenn Hubbard
Daniel P. Kessler
Abstract

In this paper, we estimate the effect of the tax preference for insurance on health spending based on 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 tax preference's impact. 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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13767.

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Date of creation: Jan 2008
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Handle: RePEc:nbr:nberwo:13767

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H2 - Public Economics - - Taxation, Subsidies, and Revenue
I1 - Health, Education, and Welfare - - Health

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Amy Finkelstein, 2007. "The Aggregate Effects of Health Insurance: Evidence from the Introduction of Medicare," The Quarterly Journal of Economics, MIT Press, vol. 122(1), pages 1-37, 02. [Downloadable!] (restricted)
  2. Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-77, June. [Downloadable!] (restricted)
  3. Jack, William & Sheiner, Louise, 1997. "Welfare-Improving Health Expenditure Subsidies," American Economic Review, American Economic Association, vol. 87(1), pages 206-21, March. [Downloadable!] (restricted)
  4. Eichner, Matthew J, 1998. "The Demand for Medical Care: What People Pay Does Matter," American Economic Review, American Economic Association, vol. 88(2), pages 117-21, May. [Downloadable!] (restricted)
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This page was last updated on 2008-10-11.

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