IDEAS home Printed from https://ideas.repec.org/a/bpj/fhecpo/v11y2008i2n3.html
   My bibliography  Save this article

Large Health Savings Accounts: A Step toward Tax Neutrality for Health Care

Author

Listed:
  • Cannon Michael F.

    (Cato Institute)

Abstract

The creation of tax-free health savings accounts presents a new opportunity to reduce the distortions created by federal tax preferences for health-related expenditures that ultimately could help eliminate those distortions. This paper proposes changes to current law that would allow most workers to receive the full amount that they and their employer spend on their health benefits as a tax-free cash contribution to the worker's health savings account. Restructuring the exclusion for employer-sponsored health benefits in this way would enable more individuals to obtain health insurance that matches their preferences, would increase efficiency in the health care sector, and could reduce inequities created by the exclusion. These changes also offer a means of limiting the currently unlimited tax exclusion for employer-sponsored health benefits that may be more politically feasible than past proposals.

Suggested Citation

  • Cannon Michael F., 2008. "Large Health Savings Accounts: A Step toward Tax Neutrality for Health Care," Forum for Health Economics & Policy, De Gruyter, vol. 11(2), pages 1-29, March.
    • Handle: RePEc:bpj:fhecpo:v:11:y:2008:i:2:n:3
    DOI: 10.2202/1558-9544.1080
    as

    Download full text from publisher

    File URL: https://doi.org/10.2202/1558-9544.1080
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.2202/1558-9544.1080?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jonathan Gruber & James M. Poterba, 1996. "Tax Subsidies to Employer-Provided Health Insurance," NBER Chapters, in: Empirical Foundations of Household Taxation, pages 135-168, National Bureau of Economic Research, Inc.
    2. Burman, Leonard E. & Furman, Jason & Leiserson, Greg & Williams, Roberton C. Jr., 2007. "The President's Proposed Standard Deduction for Health Insurance: Evaluation and Recommendations," National Tax Journal, National Tax Association;National Tax Journal, vol. 60(3), pages 433-454, September.
    3. Feldstein, Martin S, 1973. "The Welfare Loss of Excess Health Insurance," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 251-280, Part I, M.
    4. Martin Feldstein & Jonathan Gruber, 1995. "A Major Risk Approach to Health Insurance Reform," NBER Chapters, in: Tax Policy and the Economy, Volume 9, pages 103-130, National Bureau of Economic Research, Inc.
    5. Milton Friedman, 2001. "Friedman on Friedman," Rivista di storia economica, Società editrice il Mulino, issue 1, pages 127-132.
    6. Jay Bhattacharya & M. Kate Bundorf, 2005. "The Incidence of the Healthcare Costs of Obesity," NBER Working Papers 11303, National Bureau of Economic Research, Inc.
    7. James M. Poterba (ed.), 1995. "Tax Policy and the Economy, Volume 9," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262660954, December.
    8. Feldstein, Martin & Friedman, Bernard, 1977. "Tax subsidies, the rational demand for insurance and the health care crisis," Journal of Public Economics, Elsevier, vol. 7(2), pages 155-178, April.
    9. Furman, Jason, 2006. "Two Wrongs Do Not Make a Right," National Tax Journal, National Tax Association;National Tax Journal, vol. 59(3), pages 491-508, September.
    10. Martin Feldstein & James M. Poterba, 1996. "Empirical Foundations of Household Taxation," NBER Books, National Bureau of Economic Research, Inc, number feld96-1, March.
    11. James M. Poterba, 1995. "Tax Policy and the Economy, Volume 9," NBER Books, National Bureau of Economic Research, Inc, number pote95-1, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Isabelle Hirtzlin, 2017. "Comptes d’épargne santé : vers un nouveau mode de financement des soins ?," Post-Print hal-01575611, HAL.
    2. Isabelle Hirtzlin, 2017. "Comptes d’épargne santé : vers un nouveau mode de financement des soins ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01575611, HAL.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jaspersen, Johannes G. & Richter, Andreas, 2015. "The wealth effects of premium subsidies on moral hazard in insurance markets," European Economic Review, Elsevier, vol. 77(C), pages 139-153.
    2. Charles E. Phelps, 1984. "Taxing Health Insurance: How Much Is Enough?," Contemporary Economic Policy, Western Economic Association International, vol. 3(2), pages 47-54, December.
    3. Jonathan Gruber & James M. Poterba, 1993. "Tax Incentives and the Decision to Purchase Health Insurance: Evidence from the Self-Employed," NBER Working Papers 4435, National Bureau of Economic Research, Inc.
    4. Blomqvist, Ake, 1997. "Optimal non-linear health insurance," Journal of Health Economics, Elsevier, vol. 16(3), pages 303-321, June.
    5. Zabinski, Daniel & Selden, Thomas M. & Moeller, John F. & Banthin, Jessica S., 1999. "Medical savings accounts: microsimulation results from a model with adverse selection," Journal of Health Economics, Elsevier, vol. 18(2), pages 195-218, April.
    6. John F. Cogan & R. Glenn Hubbard & Daniel P. Kessler, 2007. "Evaluating Effects of Tax Preferences on Health Care Spending and Federal Revenues," NBER Chapters, in: Tax Policy and the Economy, Volume 21, pages 65-82, National Bureau of Economic Research, Inc.
    7. Ellis, Randall P. & Jiang, Shenyi & Manning, Willard G., 2015. "Optimal health insurance for multiple goods and time periods," Journal of Health Economics, Elsevier, vol. 41(C), pages 89-106.
    8. repec:dpr:wpaper:0905 is not listed on IDEAS
    9. Martin Feldstein, 1993. "Government Spending and Budget Deficits in the 1980s: A Personal View," NBER Working Papers 4324, National Bureau of Economic Research, Inc.
    10. Martin Feldstein & Jonathan Gruber, 1995. "A Major Risk Approach to Health Insurance Reform," NBER Chapters, in: Tax Policy and the Economy, Volume 9, pages 103-130, National Bureau of Economic Research, Inc.
    11. Manning, Willard G. & Marquis, M. Susan, 1996. "Health insurance: The tradeoff between risk pooling and moral hazard," Journal of Health Economics, Elsevier, vol. 15(5), pages 609-639, October.
    12. James M. Poterba & John B. Shoven, 2002. "Exchange-Traded Funds: A New Investment Option for Taxable Investors," American Economic Review, American Economic Association, vol. 92(2), pages 422-427, May.
    13. Nyman, John A., 1999. "The economics of moral hazard revisited," Journal of Health Economics, Elsevier, vol. 18(6), pages 811-824, December.
    14. Jonathan Gruber & Michael Lettau, 2000. "How Elastic is the Firm's Demand for Health Insurance?," NBER Working Papers 8021, National Bureau of Economic Research, Inc.
    15. Kowalski, Amanda E., 2015. "Estimating the tradeoff between risk protection and moral hazard with a nonlinear budget set model of health insurance," International Journal of Industrial Organization, Elsevier, vol. 43(C), pages 122-135.
    16. Pierre Martinon & Pierre Picard & Anasuya Raj, 2017. "On the Design of Optimal Health Insurance Contracts under Ex Post Moral Hazard," Working Papers hal-01348551, HAL.
    17. Jung, Juergen & Tran, Chung, 2022. "Social health insurance: A quantitative exploration," Journal of Economic Dynamics and Control, Elsevier, vol. 139(C).
    18. Charles Yuji Horioka, 2014. "The Life and Work Of Martin Stuart (“Marty”) Feldstein," UP School of Economics Discussion Papers 201410, University of the Philippines School of Economics.
    19. Thomas Selden, 2008. "The effect of tax subsidies on high health care expenditure burdens in the United States," International Journal of Health Economics and Management, Springer, vol. 8(3), pages 209-223, September.
    20. Cockx, Bart & Brasseur, Carine, 2003. "The demand for physician services: Evidence from a natural experiment," Journal of Health Economics, Elsevier, vol. 22(6), pages 881-913, November.
    21. Janet Currie & Aaron S. Yelowitz, 1999. "Health Insurance and Less Skilled Workers," JCPR Working Papers 63, Northwestern University/University of Chicago Joint Center for Poverty Research.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:fhecpo:v:11:y:2008:i:2:n:3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.