The macroeconomics of heath savings accounts

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Macroeconomics of Health Savings Accounts.pdf (1.51 MB)

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https://ideas.repec.org/p/tow/wpaper/2010-12.html

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http://hdl.handle.net/11603/10768

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Towson University Department of Economics Working Paper Series

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Author/Creator ORCID

Date

2010

Type of Work

working papers
Text
application/pdf

Department

Towson University. Department of Economics

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Citation of Original Publication

Juergen Jung & Chung Tran, 2010. "The Macroeconomics of Health Savings Accounts," Working Papers 2010-12, Towson University, Department of Economics, revised Nov 2016.

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Subjects

Health saving accounts
Health care reform
Privatization of health care systems
Health insurance
Endogenous health
Stochastic dynamic general equilibrium
Equilibrium (Economics)

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, while simultaneously increasing the fraction of insured individuals. Unlike previous studies on HSAs, our analysis relies on a general equilibrium framework and therefore fully accounts for feedback effects from general equilibrium price adjustments. 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 curtail spending on health care. These results depend critically on the interaction of general equilibrium effects and the annual contribution limits to HSAs. Finally, the long-run tax revenue loss due to the introduction of HSAs is substantial and can amount to up to 5 percent of GDP.