This is the Kader Daily Podcast for Friday, July 28th, 2003.

I'm Caleb Brown.

The original sin of U.S. health care policy is the income tax, which has given rise to multiple distortions of the US health

sector and wasted a great deal of the spending that is done on behalf of

Americans health. Michael Cannon is author of a new piece at the Cato Institute on the subject.

We spoke earlier this week.

For those not familiar, trying to draw a line from the federal income tax to the provision of health care products and services today is not

totally clear.

And I call it the original sin of U.S. health policy because I want to distinguish this is federal

health policy that we're talking about and because even though the connection

is not immediately apparent and certainly when Congress created the income tax they didn't

intend to wreck the health sector in this country, nevertheless you can tie just about every problem in the

U.S. health sector to the creation of the income tax and the unintended

consequences that followed from it.

And what I mean by that is back in 1913 when Congress created the income tax, well

they said, okay if you earn income, we're going to tax it.

Well there's all sorts of ways that employers can pay workers.

One of them is with medical care directly or health insurance, and back in 1913, very few

employers did that because medicine really wasn't worth much back then

it was as likely to harm you as it was to help you and it wasn't very expensive because there wasn't much that

medicine can do so almost no one had health

insurance very few employers offered any sort of health benefit much less

...