The Macroeconomics of Health Savings Accounts

38 Pages Posted: 25 Oct 2007 Last revised: 12 Oct 2008

See all articles by Juergen Jung

Juergen Jung

Towson University - Department of Economics

Chung Tran

Australian National University (ANU) - School of Economics

Date Written: April 11, 2008

Abstract

We analyze whether a consumer driven health care plan like the newly established Health Savings Accounts (HSAs) can reduce health care expenditures in the United States and increase the fraction of the population with health insurance. Unlike previous literature, our analysis relies on a dynamic general equilibrium framework with heterogenous agents. We endogenize health care expenditure and insurance choice, so that the model fully accounts for feedback effects from both factor markets and insurance markets. We then highlight the importance of including general equilibrium effects into the policy analysis. Specifically, our results from numerical simulations indicate that the success of HSAs depends critically on the productivity of health and the annual contribution limit to HSAs. In addition, we find that taxpayers can face substantial costs when HSAs are introduced to insure more people and to curb aggregate health expenditures.

Keywords: Health Savings Accounts, Consumer Driven Health Care Plans, Health Insurance, Privatization of Health Care, General Equilibrium Health Uncertainty Model, Numerical Simulation of Health Care Reform

JEL Classification: H51, I18, I38

Suggested Citation

Jung, Juergen and Tran, Chung, The Macroeconomics of Health Savings Accounts (April 11, 2008). CAEPR Working Paper No. 2007-023, Available at SSRN: https://ssrn.com/abstract=1024556 or http://dx.doi.org/10.2139/ssrn.1024556

Center for Applied Economics And Policy Research (Contact Author)

Indiana University Bloomington - Department of Economics

Wylie Hall
Bloomington, IN 47405-6620
United States

Juergen Jung

Towson University - Department of Economics ( email )

Baltimore, MD
United States
812-345-9182 (Phone)

HOME PAGE: http://https://juejung.github.io/

Chung Tran

Australian National University (ANU) - School of Economics ( email )

Arndt Building 25B
Canberra, Australian Capital Territory 0200
Australia

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