Most Americans have government-subsidized health care

at 11:03 AM ET, 04/11/2011

Gallup posted this table alongside the headline, “In U.S., 1 in 4 Adults Have Government Health Insurance.” But they’re understating their case:

Most of the people who have health-care insurance and don’t get it from Medicare, Medicaid or the military/veteran’s systems are getting it from their employer. And the reason they’re getting it from their employer is that health-care benefits — unlike wages — are tax deductible. That ends up being a huge subsidy for people who get health care through their employers. Between 2010 and 2014, the Joint Committee on Taxation estimates that this break will cost the Treasury about $660 billion. It’s the single most expensive tax expenditure in the entire tax code.

So let’s say you eliminated it tomorrow. Poof, gone. The day after that, tens of millions would lose their health-care benefits, as the only thing that makes those benefits affordable for employers is that tax break. So I’d suggest that those Americans also have a form of government-provided health care. But because we’ve hidden their subsidy in a way we haven’t hidden Medicare or Medicad, they get to continue thinking that they’re the sort of hardworking folks who get no benefits from the government and instead get taxed to support all these old and poor people. In reality, they’re getting a massive tax break that’s being paid for by the uninsured, the unemployed, the self-employed, and people whose employers don’t offer health-care insurance.

This is, perhaps, the most important fact about both the policy and the political economy of America’s health-care system: Virtually all insurance in this country receives heavy government support. But whereas the support for old-age and low-income/disability insurance is pretty straightforward and efficient, the support for employers who provide private insurance to mostly middle and upper-income workers is opaque, inefficient and often ignored when the time comes to talk deficit reduction. The Affordable Care Act was a rare exception here, as it included an excise tax that’s meant, in a slightly roundabout way, to unwind this tax break over time.

 
Read what others are saying

    Most Read: Business

    DJIA
    0.03%
    NASDAQ
    0.17%
     Last Update: : AM 12/25/2014(NASDAQ&DJIA)

    World Markets from      

     

    Other Market Data from      

     

    Key Rates from