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The Macroeconomics of Health Savings Accounts

  • Juergen Jung

    ()

    (Department of Economics, Towson University)

  • Chung Tran

    ()

    (Research School of Economics, The Australian National University)

We analyze whether the introduction of Health Savings Accounts (HSAs), which is a health insurance reform coupled with a capital tax reform, can reduce health care expenditures in the United States and increase the fraction of the population with health insurance. Unlike previous studies on HSAs, our analysis relies on a general equilibrium framework and therefore fully accounts for feedback effects from general equilibrium price changes. Our results from numerical simulations indicate that the introduction of HSAs increases the percentage of the working age population with health insurance in the long run but fails to control spending on health care. The outcome of a HSAs reform depends critically on the annual contribution limits to HSAs and the interplay of general equilibrium effects. Finally, the long-run tax revenue loss due to the introduction of HSAs is large and can amount to up to 5 percent of GDP.

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File URL: http://www.towson.edu/cbe/economics/workingpapers/2010-12.pdf
File Function: First version, 2010
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Paper provided by Towson University, Department of Economics in its series Working Papers with number 2010-12.

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Length: 43 pages
Date of creation: Jun 2010
Date of revision: May 2011
Handle: RePEc:tow:wpaper:2010-12
Contact details of provider: Postal: Towson, Maryland 21252-0001
Phone: 410-704-2959
Fax: 410-704-3424
Web page: http://www.towson.edu/cbe/economics/

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