The effect of tax subsidies on high health care expenditure burdens in the United States

  • Thomas M. SeldenEmail author


Previous analyses of families with high health care expenditure burdens have ignored the potentially mitigating effects of tax subsidies. This analysis uses data from the Medical Expenditure Panel Survey (MEPS) to fill this gap. A range of health expenditure burden measures are computed, with and without tax subsidies, showing the impact that tax subsidies have on both the prevalence and magnitude of high health care spending burdens among the nonelderly.


Burdens Tax subsidies Equity 

JEL Classifications

I18 H24 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Agency for Healthcare Research and Quality. (2004). MEPS HC-070: 2002 Full Year Consolidated Data File, available at Accessed 16 Oct 2007.
  2. Alecxih L., Corea J., Gross D.J. et al (2001) Methodological biases in estimating the burden of out-of-pocket expenses: Reply. Health Services Research 35(6): 1365–1370Google Scholar
  3. Banthin J.S., Bernard D.M. (2006) Changes in financial burdens for health care: National estimates for the population younger than 65 years, 1996 to 2003. Journal of the American Medical Association 296(22): 2712–2719 doi: 10.1001/jama.296.22.2712 CrossRefGoogle Scholar
  4. Banthin J.S., Cunningham P., Bernard D.M. (2008) Financial burden of health care, 2001–2004. Health Affairs 27(1): 188–195 doi: 10.1377/hlthaff.27.1.188 CrossRefGoogle Scholar
  5. Banthin J.S., Selden T.M. (2003) The ABCs of children’s health care: How the medicaid expansions affected access, burdens, and coverage between 1987 and 1996. Inquiry 40(2): 133–145Google Scholar
  6. Banthin, J. S., & Selden, T. M. (2006). Income measurement in the medical expenditure panel survey. CFACT Working Paper No. 06005, Rockville, MD: Agency for Healthcare Research and Quality, available at Accessed 1 Oct 2007.
  7. Bernard D.M., Banthin J.S., Encinosa W.E. (2006) Health care expenditure burdens among adults with diabetes, 2001. Medical Care 44(3): 210–215 doi: 10.1097/01.mlr.0000199729.25503.60 CrossRefGoogle Scholar
  8. Bernard D.M., Selden T.M. (2006) Workers who decline employment-related health insurance. Medical Care 44(5, Supplement): I12–I18Google Scholar
  9. Centers for Medicare and Medicaid Services (2007). NHE Summary Including Share of GDP, CY 1960–2005, available at Accessed 1 Oct 2007.
  10. Cohen J.W., Monheit A.C., Beauregard K.M. et al (1996) The medical expenditure panel survey: A national health information resource. Inquiry 33(Winter, 4): 373–389Google Scholar
  11. Cohen, S. B. (1997). Sample design of the 1996 medical expenditure panel survey household component, MEPS Methodology Report No. 2, Pub. No. 97-0027. Rockville, MD: Agency for Health Care Policy and Research.Google Scholar
  12. Employee Benefit Research Institute. (2003). FACTS from EBRI, Washington, DC, available at Accessed 10 May 2008.
  13. Feenberg D., Coutts E. (1993) An introduction to the TAXSIM model. Journal of Policy Analysis and Management 12(1): 189–194 doi: 10.2307/3325474 CrossRefGoogle Scholar
  14. Fox W.F., Murray M.N. (2005) A national retail sales tax: Consequences for the states. State Tax Notes 37: 287–304Google Scholar
  15. Goldman D.P., Smith J.P. (2001) Methodological biases in estimating the burden of out-of-pocket expenses. Health Services Research 35(6): 1357–1365Google Scholar
  16. Gross D.J., Alecxih L., Gibson M.J. et al (1999) Out-of-pocket health spending by poor and near-poor elderly medicare beneficiaries. Health Services Research 34(1, Part II): 241–254Google Scholar
  17. Gruber J., Poterba J.M. (1996) Tax subsidies to employer-provided health insurance. In: Feldstein M., Poterba J.M.(eds) Empirical Foundations of Household Taxation. The University of Chicago Press, ChicagoGoogle Scholar
  18. Hwang W., Weller W., Ireys H., Anderson G. (2001) Out-of-pocket medical spending for care of chronic conditions. Health Affairs 20(6): 267–278 doi: 10.1377/hlthaff.20.6.267 CrossRefGoogle Scholar
  19. National Bureau of Economic Research. (2007). TAXIM related files at the NBER, available at Accessed 18 Sept 2007.
  20. Pauly M.V., Herring B. (1999) Pooling Health Insurance Risks. The AEI Press, Washington, DCGoogle Scholar
  21. Schoen, C., Doty, M. M., Collins, S. R., & Holmgren, A. L. (2005). Insured but not protected: How many adults are underinsured? Health Affairs, 25(6), Web Exclusive: w555–w571, available at Accessed 16 Oct 2007.
  22. Selden T.M., Banthin J.S. (2003) Health care expenditure burdens among elderly adults: 1987 and 1996. Medical Care 41(7, Supplement): III13–III23 doi: 10.1097/00005650-200307001-00003 CrossRefGoogle Scholar
  23. Selden T.M., Bernard D.M. (2004) Tax incidence and net benefits in the market for employment-related health insurance: Sensitivity of estimates to the incidence of employer costs. International Journal of Health Care Finance and Economics 4(2): 167–192 doi: 10.1023/B:IHFE.0000032422.90886.86 Google Scholar
  24. Selden, T. M., & Sing, M. (2008a). The distribution of public spending for health care in the United States. mimeo. Rockville, MD: Agency for Healthcare Research and Quality.Google Scholar
  25. Selden, T. M., & Sing, M. (2008b). Aligning the medical expenditure panel survey to aggregate U.S. benchmarks. CFACT Working Paper No. 8006. Rockville, MD: Agency for Healthcare Research and Quality. available at Accessed 15 May 2008.
  26. Sheils, J., & Haught, R. (2004). The cost of tax-exempt health benefits in 2004. Health Affairs, Web Exclusive: W4-106–W4-112.Google Scholar
  27. Sing M., Banthin J.S., Selden T.M. et al (2006) Reconciling medical expenditure estimates from the MEPS and NHEA, 2002. Health Care Financing Review 28(1): 25–40Google Scholar

Copyright information

© US Government 2008

Authors and Affiliations

  1. 1.Division of Modeling and Simulation, Center for Financing, Access and Cost TrendsAgency for Healthcare Research and QualityRockvilleUSA

Personalised recommendations