ANOTHER LIBERTARIAN MARKET FAILURE

Peter Suderman, talking about the GOP's Obamacare strategy, seems disappointed that Republicans have been reluctant to propose sweeping changes to the nation's health care scheme besides Repeal Because Freedom. His Republican sources also complain of it, with (considering the Party's historic obstructionist approach to all things Obama)  breathtakingly transparent insincerity: One of them -- "'We don't have a Republican majority that remembers how to govern and understands how to juggle trade­offs,' one health policy aide complains" -- actually made me laugh out loud.

As you would expect, Suderman gives a favorable hearing to the ideas of libertarian-conservative wonks:

In a 2009 paper, "Yes, Mr. President: A Free Market Can Fix Health Care"...

What'd I tell you?

...[Cato Institute Health Policy Director Michael] Cannon laid out a plan for converting Medicare into a voucher system (he now favors Social Security-style direct payments to enrollees), ending state-based monopolies on both insurance and clinician licensing, capping federal spending on Medicaid through block grants, and eliminating the tax preference for employer-sponsored health care. 

Eliminating that tax preference, which since World War II has allowed employers to purchase health coverage for employees on a tax advantaged basis, would actually result in a substantial tax cut, Cannon argues counter-intuitively.

I'll say it's counterintuitive. So is the rest of it, for those of us who've been trained by decades of experience to hear "ending state-based monopolies," "capping federal spending," etc. as the patter of privatization bunco artists.

If employers cashed out the amount they now pay for health insurance, workers with family coverage would see an average compensation increase of $11,000.

Question for my readers residing in workaday reality: If your boss got a $11,000 windfall, would you expect him to forward it to you?  (These are the same people who'll tell you that if your landlord is absolved of rent control and can charge any rent he likes, he'll lower yours.)

The trick would be to replace that tax preference with the creation of very large health savings accounts-tax-free savings that could be applied toward health purchases. Versions of these accounts exist today, but they are capped at $3,300 for individual coverage and $6,550 for families; Cannon's proposal would dramatically increase the cap, perhaps tripling it, and in the process free thousands in individual income both from taxation and from employer control. The result would be to simultaneously give individuals control of thousands of dollars in compensation now tied up in employer health benefits, while eliminating the government-granted financial advantage of employer-provided coverage. Individuals, and not their employment status, would then dictate health insurance coverage.

And if that worker bee, freed from the necessity of paying into a liberty-restricting group insurance program, finds his car needs a new transmission and his home needs a new boiler, and he doesn't put as much into that savings account as he'd planned, and suddenly gets cancer, it's sad trombone time (though libertarians won't feel sad themselves, because Moochers Have It Coming).

Suderman also talks about last year's government shutdown; he knows it was unpopular and counterproductive, but he doesn't appear to know why. It's simple: The nation may dislike Obamacare, but that doesn't mean they prefer Pay or Die.