A merican health care is beset by a well-known litany of problems. Forty-six million Americans lack health insurance, resulting in, according to the Institute of Medicine, 18,000 avoidable deaths each year. At the same time, the principal mechanism for providing health insurance, through employers, is unraveling: the number of non-elderly Americans without employer-sponsored insurance jumped by 15 million from 2000 to 2004. Health costs are also an increasingly larger share of the economy and rising rapidly. Premiums have jumped 73 percent since 2000 and aggregate health spending is projected to increase by another 49 percent by 2015, when total spending will reach 20 percent of U.S. GDP. We could, as a nation, choose to spend that much of our total income on health care, and one would expect that the country, in return, would enjoy some of the best health outcomes in the world. Unfortunately, that’s not the case. Not only do we spend more than any other country on health care, nearly 50 percent more per capita than the second-highest-spending nation, but citizens in 28 other countries have a higher life expectancy and 33 other nations have lower infant mortality rates.

If this were a government-run health care system, the voting public and policymakers would be up in arms. Yet, perhaps because health care is largely perceived as a private-sector concern, there is relative quiet: while voters tell pollsters that it is a top priority, there appears not to be comparable political pressure for serious reform or any fundamental change in the government’s involvement, either in the provision or funding of health care. This is in part because much of the federal government’s involvement with the health care system is through the hidden backdoor of the tax code. An important principle for modern progressives is that when the government has to intervene in the marketplace, it should not prop up failure. Yet the federal government is, in fact, deeply involved in perpetuating the current "private" health care system and all its flaws, spending approximately $200 billion annually in subsidizing employer-provided insurance. It is the single biggest subsidy in our tax system, more than twice as costly as the mortgage interest deduction. The only government programs that cost more ...