Government’s already existing hand in US health insurance

The Supreme Court upheld the individual mandate today. As such, I thought I would break my hiatus briefly. One of the talking points among detractors of the health care law was that it constituted a government takeover of healthcare. That is understandably a form of political rhetoric aimed at firing up a base, but it is profoundly misleading. The reality is that government already has a very substantial role in the health insurance of Americans.

Already, more than a third of insured people get their insurance directly from the state in the form of Medicaid, Medicare, or military coverage. More than that however, employer-provided health insurance is heavily subsidized by the government. Employers that provide such insurance get substantial tax subsidies. Those subsidies amount to $200 billion per year. The state is therefore already pouring $200 billion into employer-provided health insurance as it is. It is hard to understand that system as somehow separate from government influence.

When you exclude direct government insurance and government-subsidized employer-provided health insurance, all that you are left with is 30 million people with direct health insurance and 50 million with no health insurance at all. Government staying out of health insurance is something that passed long ago.