Health Insurance Design Meets Saving Incentives: Consumer Responses to Complex Contracts
American Economic Journal: Applied Economics
vol. 14,
no. 2, April 2022
(pp. 200-227)
Abstract
To lower health care costs, Health Savings Accounts (HSAs) offer tax incentives encouraging people to trade off current consumption against future consumption. This paper tests whether consumers use HSAs as self-insurance over the life cycle. Using administrative data from a large employer and a regression discontinuity design, I estimate the marginal propensity to consume from HSA assets is 0.85 and reject the neoclassical benchmark of 0. Comparisons with 401(k) saving show most employees do not treat HSA money as fungible with retirement savings. In this setting, HSAs did not reduce health spending and instead increased the share that was financed tax-free.Citation
Leive, Adam. 2022. "Health Insurance Design Meets Saving Incentives: Consumer Responses to Complex Contracts." American Economic Journal: Applied Economics, 14 (2): 200-227. DOI: 10.1257/app.20200135Additional Materials
JEL Classification
- D15 Intertemporal Household Choice; Life Cycle Models and Saving
- D82 Asymmetric and Private Information; Mechanism Design
- G22 Insurance; Insurance Companies; Actuarial Studies
- G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
- I13 Health Insurance, Public and Private
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