Taxing health insurance: how much is enough?

by Charles E. Phelps


Purchase Print Copy

 FormatList Price Price
Add to Cart Paperback14 pages $20.00 $16.00 20% Web Discount

The Reagan Administration proposes to limit the amount of health insurance premiums remaining tax-exempt, hoping to curtail rising health costs (by reducing insurance coverage, hence medical care use) and to raise revenues to offset the large federal deficit. The proposed change will have little effect on either dimension. Most likely consumer response will reduce dental, drug, and eyeglass insurance but leave essentially unchanged the insurance coverage for hospital and doctor care--the most bothersome health cost sectors. Larger, differently structured tax changes offer the possibility of dramatically reducing health costs, as well as raising (at maximum) $27 billion per year in new tax revenues.

This report is part of the RAND Corporation Paper series. The paper was a product of the RAND Corporation from 1948 to 2003 that captured speeches, memorials, and derivative research, usually prepared on authors' own time and meant to be the scholarly or scientific contribution of individual authors to their professional fields. Papers were less formal than reports and did not require rigorous peer review.

Our mission to help improve policy and decisionmaking through research and analysis is enabled through our core values of quality and objectivity and our unwavering commitment to the highest level of integrity and ethical behavior. To help ensure our research and analysis are rigorous, objective, and nonpartisan, we subject our research publications to a robust and exacting quality-assurance process; avoid both the appearance and reality of financial and other conflicts of interest through staff training, project screening, and a policy of mandatory disclosure; and pursue transparency in our research engagements through our commitment to the open publication of our research findings and recommendations, disclosure of the source of funding of published research, and policies to ensure intellectual independence. For more information, visit

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.