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Large Health Savings Accounts: A Step toward Tax Neutrality for Health Care

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  • Cannon Michael F.

    (Cato Institute)

Abstract

The creation of tax-free health savings accounts presents a new opportunity to reduce the distortions created by federal tax preferences for health-related expenditures that ultimately could help eliminate those distortions. This paper proposes changes to current law that would allow most workers to receive the full amount that they and their employer spend on their health benefits as a tax-free cash contribution to the worker's health savings account. Restructuring the exclusion for employer-sponsored health benefits in this way would enable more individuals to obtain health insurance that matches their preferences, would increase efficiency in the health care sector, and could reduce inequities created by the exclusion. These changes also offer a means of limiting the currently unlimited tax exclusion for employer-sponsored health benefits that may be more politically feasible than past proposals.

Suggested Citation

  • Cannon Michael F., 2008. "Large Health Savings Accounts: A Step toward Tax Neutrality for Health Care," Forum for Health Economics & Policy, De Gruyter, vol. 11(2), pages 1-29, March.
    • Handle: RePEc:bpj:fhecpo:v:11:y:2008:i:2:n:3
    DOI: 10.2202/1558-9544.1080
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    References listed on IDEAS

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    Cited by:

    1. Isabelle Hirtzlin, 2017. "Comptes d’épargne santé : vers un nouveau mode de financement des soins ?," Post-Print hal-01575611, HAL.
    2. Isabelle Hirtzlin, 2017. "Comptes d’épargne santé : vers un nouveau mode de financement des soins ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01575611, HAL.

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