Health Insurance Design Meets Saving Incentives: Consumer Responses to Complex Contracts

Adam Leive

American Economic Journal: Applied Economics, 2022, vol. 14, issue 2, 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.

JEL-codes: D15 D82 G22 G51 I13 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1257/app.20200135

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