NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Tax Subsidies to Employer-Provided Health Insurance

Jonathan Gruber, James Poterba

NBER Working Paper No. 5147 (Also Reprint No. r2060)
Issued in June 1995
NBER Program(s):   AG   HC   PE

This paper investigates the current tax subsidy to employer- provided health insurance, and presents new evidence on the economic effects of various tax reforms. It argues that previous analyses have overstated the tax subsidy to employer-provided insurance by neglecting the substantial and growing importance of after-tax employee payments for employer-provided insurance, as well as the tax subsidy for extreme medical expenses, which discourages insurance purchase. Even after considering these factors, however, the net tax subsidy to employer-provided insurance is substantial, with tax factors generating an average reduction of approximately thirty percent in the price of this insurance. Reducing the tax subsidy, either by capping the value of employer-provided health insurance that could be excluded from taxation, or eliminating the exclusion entirely, would have substantial effects on the level of employer- provided insurance and on tax revenues.

download in pdf format
   (684 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (684 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w5147

Published:

Users who downloaded this paper also downloaded these:
Eaton and Kortum w5207 Engines of Growth: Domestic and Foreign Sources of Innovation
Chan, Jegadeesh, and Lakonishok w5375 Momentum Strategies
Gruber and Poterba Tax Subsidies to Employer-Provided Health Insurance
Tornell w6084 Rational Atrophy: The US Steel Industry
Glaeser and Scheinkman w4954 Neither a Borrower nor a Lender Be: An Economic Analysis of Interest Restrictions and Usury Laws
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us