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The Effect of Tax Preferences on Health Spending

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  • Cogan, John F.
  • Hubbard, R. Glenn
  • Kessler, Daniel P.

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.

Suggested Citation

  • Cogan, John F. & Hubbard, R. Glenn & Kessler, Daniel P., 2011. "The Effect of Tax Preferences on Health Spending," National Tax Journal, National Tax Association;National Tax Journal, vol. 64(3), pages 795-816, September.
  • Handle: RePEc:ntj:journl:v:64:y:2011:i:3:p:795-816
    DOI: 10.17310/ntj.2011.3.02
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    References listed on IDEAS

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    Cited by:

    1. Powell, David & Goldman, Dana, 2021. "Disentangling moral hazard and adverse selection in private health insurance," Journal of Econometrics, Elsevier, vol. 222(1), pages 141-160.

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