Evaluating Effects of Tax Preferences on Health Care Spending and Federal Revenues

Papers and StudiesAbstract

In this paper, we calculate the consequences for health spending and federal revenues of an above-the-line deduction for out-of-pocket health spending. We show how the response of spending to this expansion in the tax preference can be specified as a function of a small number of behavioral parameters that have been estimated in the existing literature. We compare our estimates to those from other researchers. And, we use our analysis to derive some implications for tax policy toward HSAs.

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R. Glenn Hubbard is a visiting scholar at AEI. John F. Cogan is the Leonard and Shirley Ely senior fellow at the Hoover Institution. Daniel P. Kessler is Professor of Business and Law at Stanford University.

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About the Author

 

R. Glenn
Hubbard
  • Glenn Hubbard, a former chairman of the President's Council of Economic Advisers, is currently the dean of Columbia Business School. He specializes in public and corporate finance and financial markets and institutions. He has written more than ninety articles and books, including two textbooks, on corporate finance, investment decisions, banking, energy economics, and public policy. He has served as a deputy assistant secretary at the U.S. Treasury Department and as a consultant to, among others, the Federal Reserve Board and the Federal Reserve Bank of New York.
  • Assistant Info

    Name: Brittany Pineros
    Email: brittany.pineros@aei.org

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