by Mitch Kokai
Senior Political Analyst, John Locke Foundation
The magnitude of the problem suggests that there’s a lot of room for improvement; more important, if we can only educate more people about the fact, then positive change might be on the horizon.
Because it’s not just that we waste so much money, it’s that the most wasteful spending is also the most popular.
Some of this is already broadly understood, at least among those with an interest in health-care policy. America’s two major health-care entitlements are gobbling up ever-bigger amounts of cash for less and less value. The two major health-care entitlements I am referring to, of course, are Medicare and employer-sponsored health insurance, which is subsidized by the biggest loophole in the tax code. (You thought I was going to say Medicaid? True, Medicaid is terrible, but for different reasons.)
Yes, the latter is very much an entitlement. Some conservatives resist that sort of language in the interest of a philosophical defense of private-property rights, the idea being that to call a tax break government spending presupposes that our money belongs to the government. I applaud and share the philosophical attachment to private-property rights, but we shouldn’t let it obscure the fact that macroeconomically, tax expenditures have many of the same effects as government spending, since they represent spending directed by the government rather than private individuals.
While Medicare’s dysfunction is mostly only on the radar for right-leaning health-policy wonks, there is broad unanimity that the tax break for employer-sponsored health insurance, passed during World War II to get around wage controls and having since ballooned into a monster, is one of our major sources of waste. It is a huge giveaway to insurers and virtually ensures that third-party payments — the “original sin” of the American health-care system, that which prevents consumer dynamics from operating — remain the center of the system.