John F. Cogan

Perspectives from the President's Commission on Social Security Reform

Recently we were asked to serve on the Presidents Commission to Strengthen Social Security (CSSS) along with 14 other members drawn equally from both major political parties. The Commissions charge was to provide recommendations to modernize the Social Security system, restore its fiscal soundness, and develop a workable system of Personal Retirement Accounts. This paper explains how the Commission arrived at some of its recommendations and the role that economics played in contributing to these recommendations. We describe the key institutional constraints confronting efforts to reform Social Security and how these constraints influenced Commission decisions. We also illustrate how economics research influenced the Commissions analysis of how to structure personal accounts, ways to enhance traditional Social Security program finances, and means of measuring the extent of financial progress achieved through reform.

Reforming the Tax Preference for Employer Health Insurance

The tax preference for employer-sponsored health insurance contributes to the very high level of health spending in the United States. In this paper, we consider the consequences for spending of one approach to reducing this preference: giving people with health insurance an additional deduction for their expected out-of-pocket spending, that is, an additional deduction that declines as the actuarial value of their insurance rises. We show that this approach would reduce health spending more and have a smaller budget cost than the deduction for actual out-of-pocket spending analyzed by Cogan, Hubbard, and Kessler by encouraging a shift to higher-copayment health insurance. We estimate that a deduction for expected out-of-pocket expenses would reduce private health spending by

Evaluating Effects of Tax Preferences on Health Care Spending and Federal Revenues

86 billion in 2010 at a budget cost of approximately

New Keynesian Versus Old Keynesian Government Spending Multipliers

5 billion. We conclude that, under reasonable assumptions about consumers’ valuation of this incremental spending and the cost of public funds, such a deduction would be welfare improving.

New Keynesian versus Old Keynesian Government Spending Multipliers

In this paper, we calculate the consequences for health spending and the federal budget of an above-the-line deduction for out-of-pocket health spending. We show how the response of spending to this expansion in the tax preference can be specified as a function of a small number of behavioral parameters that have been estimated in the existing literature. We compare our estimates to those from other researchers. And, we use our analysis to derive some implications for tax policy toward HSAs.