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


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.

This is a preview of subscription content, log in to check access.


  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): 1365–1370

    Google 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

    Article  Google 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

    Article  Google 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): 133–145

    Google 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

    Article  Google Scholar 

  8. Bernard D.M., Selden T.M. (2006) Workers who decline employment-related health insurance. Medical Care 44(5, Supplement): I12–I18

    Google 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): 373–389

    Google 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.

  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

    Article  Google Scholar 

  14. Fox W.F., Murray M.N. (2005) A national retail sales tax: Consequences for the states. State Tax Notes 37: 287–304

    Google 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): 1357–1365

    Google 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): 241–254

    Google 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, Chicago

    Google 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

    Article  Google 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, DC

    Google 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

    Article  Google 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.

  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.

  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): 25–40

    Google Scholar 

Download references

Author information



Corresponding author

Correspondence to Thomas M. Selden.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Selden, T.M. The effect of tax subsidies on high health care expenditure burdens in the United States. Int J Health Care Finance Econ 8, 209–223 (2008).

Download citation


  • Burdens
  • Tax subsidies
  • Equity

JEL Classifications

  • I18
  • H24