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A Note on Financing Health-Care Reform: Some Simple Arguments Concerning Marginal Tax Burden

Author

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  • Wolfgang Buchholz

Abstract

In Germany economic experts and politicians are proposing a fundamental reform of the health-care system by which the current wage-dependent contributions are replaced by flat-rate insurance premiums. One major reason behind this proposal is the wish to avoid the distortion effects caused by the present form of levying the fees, which works like a wage income tax. The purpose of this note is to show by some simple axiomatics that these hopes may be exaggerated. As social compensation is required, the reform as such does not automatically reduce the distortion effects of the current system. Welfare gains will only be generated by some additional features of the proposed system change, which are briefly discussed at the end of the paper.

Suggested Citation

  • Wolfgang Buchholz, 2005. "A Note on Financing Health-Care Reform: Some Simple Arguments Concerning Marginal Tax Burden," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(3), pages 438-446, November.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200511)61:3_438:anofhr_2.0.tx_2-v
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    Citations

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    Cited by:

    1. Wolfram F. Richter, 2009. "Zur zukünftigen Finanzierung der Gesundheitsausgaben in Deutschland," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 10(4), pages 469-479, November.
    2. Göpffarth Dirk & Henke Klaus-Dirk, 2007. "Finanzierungsreform und Risikostrukturausgleich – Was bleibt vom Ausgleichsverfahren? / Health Care Finance Reform in Germany – Effects on the Risk Adjustment Scheme," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 227(1), pages 27-48, February.
    3. Kemnitz Alexander, 2013. "A Simple Model of Health Insurance Competition," German Economic Review, De Gruyter, vol. 14(4), pages 432-448, December.
    4. Wolfram F. Richter, 2009. "Germany goes ahead with Health Vouchers," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(03), pages 53-60, October.
    5. Richter, Wolfram F., 2010. "Finanzierung des Krankenversicherungsschutzes: Entgleiste Reformdebatte wieder auf Spur," IZA Standpunkte 29, Institute of Labor Economics (IZA).
    6. Wolfram F. Richter, 2009. "Germany goes ahead with Health Vouchers," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(3), pages 53-60, October.
    7. repec:ces:ifodic:v:7:y:2009:i:3:p:14567062 is not listed on IDEAS
    8. Haufler, Andreas, 2004. "Welche Vorteile bringt eine Pauschalprämie für die Finanzierung des Gesundheitswesens? Einige einfache Äquivalenzresultate," Discussion Papers in Economics 440, University of Munich, Department of Economics.
    9. repec:jns:jbstat:v:227:y:2007:i:1:p:27-48 is not listed on IDEAS
    10. Gebhard Kirchgässner, 2010. "Die Schweiz als Vorbild? Bemerkungen zur Diskussion um eine Reform des deutschen Gesundheitswesens," University of St. Gallen Department of Economics working paper series 2010 2010-15, Department of Economics, University of St. Gallen.

    More about this item

    Keywords

    health-care reform; flat rate premiums; excess burdens of income taxation;
    All these keywords.

    JEL classification:

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

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