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The Macroeconomics of Health Savings Accounts

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  • Juergen Jung

    (Department of Economics, Towson University)

  • Chung Tran

    (Research School of Economics, The Australian National University)

Abstract

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.

Suggested Citation

  • Juergen Jung & Chung Tran, 2010. "The Macroeconomics of Health Savings Accounts," Working Papers 2010-12, Towson University, Department of Economics, revised Nov 2016.
  • Handle: RePEc:tow:wpaper:2010-12
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    Cited by:

    1. Sheng-Ti Hung & Kevin X.D. Huang & Hui He, 2013. "Substituting Leisure for Health Expenditure: A General Equilibrium-Based Empirical Investigation," 2013 Meeting Papers 1310, Society for Economic Dynamics.
    2. Hui He & Kevin x.d. Huang, 2013. "Why Do Americans Spend So Much More on Health Care than Europeans?--A General Equilibrium Macroeconomic Analysis," Vanderbilt University Department of Economics Working Papers 13-00005, Vanderbilt University Department of Economics.
    3. Jung, Juergen & Tran, Chung, 2012. "The extension of social security coverage in developing countries," Journal of Development Economics, Elsevier, vol. 99(2), pages 439-458.
    4. Zhao, Kai, 2014. "Social security and the rise in health spending," Journal of Monetary Economics, Elsevier, vol. 64(C), pages 21-37.
    5. Juergen Jung & Chung Tran, 2016. "Market Inefficiency, Insurance Mandate and Welfare: U.S. Health Care Reform 2010," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 20, pages 132-159, April.
    6. Halliday, Timothy J. & He, Hui & Ning, Lei & Zhang, Hao, 2019. "Health Investment Over The Life-Cycle," Macroeconomic Dynamics, Cambridge University Press, vol. 23(1), pages 178-215, January.
    7. Hui He & Kevin X.D. Huang & Lei Ning, 2021. "Why Do Americans Spend So Much More On Health Care Than Europeans?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(4), pages 1363-1399, November.
    8. Jung, Juergen & Tran, Chung, 2022. "Social health insurance: A quantitative exploration," Journal of Economic Dynamics and Control, Elsevier, vol. 139(C).
    9. Raquel Fonseca Benito & Pierre-Carl Michaud & Titus Galama & Arie Kapteyn, 2009. "On the Rise of Health Spending and Longevity," Working Papers WR-722, RAND Corporation.
    10. Juergen Jung & Chung Tran, 2008. "The Macroeconomics of Health Savings Accounts," CAEPR Working Papers 2007-023, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    11. Juergen Jung & Chung Tran, 2014. "Medical consumption over the life-cycle," Empirical Economics, Springer, vol. 47(3), pages 927-957, November.
    12. Kai (Jackie) Zhao, 2011. "Social Security and the Rise in Health Spending: A Macroeconomic Analysis," 2011 Meeting Papers 1061, Society for Economic Dynamics.
    13. Juergen Jung & Chung Tran, 2017. "Health Risk, Insurance and Optimal Progressive Income Taxation," Working Papers 2017-01, Towson University, Department of Economics, revised Jul 2022.
    14. Zhigang Feng, 2009. "Macroeconomic Consequences of Alternative Reforms to the Health Insurance System in the U.S," Working Papers 0908, University of Miami, Department of Economics.

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    More about this item

    Keywords

    Health saving accounts; health care reform; privatization of health care systems; health insurance; stochastic dynamic general equilibrium model with health.;
    All these keywords.

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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