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The tax implications of cost shifting in cost-benefit analysis in mental health

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  • Robert Brent

Abstract

This paper examines the tax implications of systems of care for psychiatric patients that rely more on the provision of services in the community rather than in state hospitals. State governments pay the costs of patient care in state hospitals, but share costs with the federal government (via Medicaid) for community based care. Taxes create distortions as gauged by the marginal cost of public funds (MCF). Since state and federal governments use different tax mixes, one needs a MCF for each form of government to evaluate system changes. Separate estimates of the MCF for each state in the USA are derived. Only for Alaska is cost shifting welfare improving.

Suggested Citation

  • Robert Brent, 2003. "The tax implications of cost shifting in cost-benefit analysis in mental health," Applied Economics, Taylor & Francis Journals, vol. 35(8), pages 943-950.
    • Handle: RePEc:taf:applec:v:35:y:2003:i:8:p:943-950
    DOI: 10.1080/0003684022000040966
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    References listed on IDEAS

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    1. Leroy P. Jones & Pankaj Tandon & Ingo Vogelsang, 1990. "Selling Public Enterprises: A Cost/Benefit Methodology," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262600625, December.
    2. Ballard, Charles L & Shoven, John B & Whalley, John, 1985. "General Equilibrium Computations of the Marginal Welfare Costs of Taxes in the United States," American Economic Review, American Economic Association, vol. 75(1), pages 128-138, March.
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    1. Yerushalmi, Erez & Ziv, Sani, 2025. "Internalizing social value in healthcare: Optimal policy in mixed public-private systems," Journal of Policy Modeling, Elsevier, vol. 47(3), pages 512-536.

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