title: THE EFFECT OF TAX PREFERENCES ON HEALTH SPENDING.
abstract: In this paper, we estimate the effect of the tax preference for health insurance on health care spending using data from the Medical Expenditure Panel Surveys from 1996-2005. We use the fact that Social Security taxes are only levied on earnings below a statutory threshold to identify the impact of the tax preference. Because employer-sponsored health insurance premiums are excluded from Social Security payroll taxes, workers who earn just below the Social Security tax threshold receive a larger tax preference for health insurance than workers who earn just above it. We find a significant effect of the tax preference, consistent with previous research.
authors.affiliation: Hoover Institution, Stanford University, Stanford, CA, USA.
authors.forename: John F
authors.initials: JF
authors.lastname: Cogan
authors.forename: R Glenn
authors.initials: RG
authors.lastname: Hubbard
authors.forename: Daniel P
authors.initials: DP
authors.lastname: Kessler