This is the Cato Daily Podcast for Wednesday, May 25, 2022 on Caleb Brown.

The federal government spends a large fraction of all health care spending and what they don't spend directly,

as in the case of the special tax

break businesses get for providing health insurance to workers. They delegate

to employers enormous power over the health care choices of working Americans.

Michael Cannon's new Cato paper is over the health care choices of working Americans.

Michael Cannon's new Cato paper is End the Tax Exclusion

for Employer Sponsored Health Insurance.

We spoke yesterday.

So one of the interesting features about the U health sector is this accidental feature that really has almost nothing to do with health care.

It's a feature of the tax code that just got there by mistake that has totally distorted the health care sector and contributes to, if not

causes, almost everything that everyone hates about the US health sector.

This thing we call the tax exclusion for employer-sponsored health insurance means that if your employer pays you in cash, the government taxes it, if your employer pays you in health benefits, there are no taxes. The government doesn't tax that at all. That sounds like a great deal, but as you say what it ends up doing is

It ends up penalizing workers unless they let their employers control a sizable chunk of their earnings and choose

their health insurance for them.

Really in many cases make their medical decisions for them. And this isn't't jump change that we're talking about.

This is almost a quarter of US health spending more than $1 trillion per year that the tax code coerces workers into letting

their employers control and so we really shouldn't it really shouldn't surprise us

that the US health care sector is not very responsive to

consumers, patients, the people the system is supposed to serve because they're not the ones

controlling the money. The government controls half of that

health spending directly by taxing that money away from us and spending that money

...