1. When individuals purchase health insurance through their employers, the income they spend on the health...

1. When individuals purchase health insurance through their employers, the income they spend on the health insurance is untaxed. How might this explain the existence of health insurance plans that cover even routine health care expenditures? How do you think this affects the overall price of healthcare? Do you think this tax benefit mostly helps lower-income or higher-income individuals? Please explain.

Expert Solution

Since the Heath care plans are actually untaxed, one can get the overall benefits of the healthcare at a reduced price where the price structure is low than expected which tells us that the demand for the healthcare plans increases. If insurance also comes under the tax, then lower income people will be benefitted as there might be an exemption in the tax system with which the net income can be increased on the whole.

Rahul Sunny answered 2 years ago

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