tag:blogger.com,1999:blog-17206839.post3261457983400239643..comments2023-09-09T09:26:22.175-04:00Comments on Andrew Samwick's Blog: The Tax Treatment of Health InsuranceAndrewhttp://www.blogger.com/profile/13514024573333057559noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-17206839.post-48549629122995915812004-12-06T11:40:00.000-05:002004-12-06T11:40:00.000-05:00Gruber and Lettau's paper "How Elastic is...Gruber and Lettau's paper "How Elastic is the Firm's Demand for Health Insurance?" (NBER WP 8081) provides estimates of the elasticity of insurance offering with respect to the net-of-tax rate that are more relevant for assessing the effects of tax reform on insurance coverage than are those in the Gruber and Washington paper. Their estimate is considerably higher (-.31 to -.41). As they write "Our simulation results suggest that major tax reform could lead to an enormous reduction in employer-provided health insurance spending."<br><br>You are right, however, that deductions for employer-provided health benefits are regressive. [More generally, so are all tax deductions, including those for mortgage interest and state income tax.]Adam O'Neillnoreply@blogger.comtag:blogger.com,1999:blog-17206839.post-35256422847906256942004-12-06T11:48:00.000-05:002004-12-06T11:48:00.000-05:00I don't think it is reasonable to assume that ...I don't think it is reasonable to assume that the response to an increase in the subsidy (Gruber/Williams) will be symmetric with a removal of the subsidy. The response is likely to be asymmetric for at least two reasons:<br><br>1) the risk averse and well to do have already chosen to accept the health insurance offer, leaving only the poor and risk neutral to respond to the subsidy. Yet the whole population will respond to the removal of the tax advantage (Bush proposal)<br><br>2) Kahneman and Tversky have spent a lifetime demonstrating that people respond asymmetrically to different types of losses (see "Prospect Theory"). Additionally, they also demonstrate how people incorrectly assess small risks. Consequently, the removal of the subsidy will be percieved as a large utility loss. <br><br>Finally, (and I'm surprised that Brad didn't mention it), the idea that MB=MC in the healthcare exchange is hard to fathom. Who can reasonably assess when the cost of a treatment outweights the benefit? Isn't the inherent information asymmetry the reason we go to the doctor?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17206839.post-47122382579835816512004-12-08T11:07:00.000-05:002004-12-08T11:07:00.000-05:00"The portion of this disparity that is due to..."The portion of this disparity that is due to the progressivity of the tax system is ridiculous. Subject it all to tax, and take some portion of the $100 - $200 billion saved and use it to provide refundable tax credits to purchase health insurance, whether through an employer or an individual policy."<br><br>And back here on planet earth, the Republican majority would actually "subject it all to tax, and take some portion of the $100-200 billion saved" to reduce taxes on capital gains and corporate dividends...<br><br>It's good to see that a Republican economist has some concern for the regressivity of federal policy, but I tend to think you're part of a very small minority.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17206839.post-15324977793674104172006-01-06T08:27:00.000-05:002006-01-06T08:27:00.000-05:00This post has been removed by a blog administrator...This post has been removed by a blog administrator.OHenrynoreply@blogger.comtag:blogger.com,1999:blog-17206839.post-59783768573810781792008-03-12T12:37:00.000-04:002008-03-12T12:37:00.000-04:00Top blogging. Very interesting postTop blogging. Very interesting postNHS Furniturehttp://www.knightsbridge-furniture.co.uk/Hospital-Furniturenoreply@blogger.comtag:blogger.com,1999:blog-17206839.post-34505786099437501642008-03-14T09:57:00.000-04:002008-03-14T09:57:00.000-04:00please continue your blog!please continue your blog!website marketinghttp://www.clearsitemarketing.co.uknoreply@blogger.com