Giving Compass' Take:

• Michael F. Cannon argues that the tax preference for employer coverage is ailing America's health care system and offers ways to change this. 

• What work can be done outside of the government to improve social determinants of health?

• Here are some policy recommendations to address social determinants of health.


Since World War II or even earlier, the US tax code has offered workers the following deal: Either (A) let your employer control thousands of dollars of your earnings, which your employer will use to enroll you in a health plan of your employer's choosing; or (B) take those earnings as taxable cash wages instead, in which case you will lose thousands to additional payroll and income taxes. In effect, those additional taxes penalize anyone who doesn't let their employer control their money and health-insurance decisions.

It's an effective incentive. An estimated 180 million US residents, or 56 percent of the population, surrender control of a total $828 billion of their earnings each year to employers because Uncle Sam otherwise threatens them with $203 billion in higher taxes. Workers with employer-sponsored family coverage surrender an average $14,069 to avoid paying $4,500 or so in additional taxes. Workers with self-only coverage surrender an average $5,711 to avoid paying $1,800 or so in additional taxes.

For 70 years, that tax penalty has fueled the problem of preexisting conditions. Unlike coverage you purchase directly, employer coverage drops you when you leave your job. Data show workers with expensive illnesses were therefore more likely to wind up uninsured if they had employer coverage versus coverage they purchased directly. This tax penalty thus took what otherwise would have been insured medical conditions and turned them into uninsured and uninsurable preexisting conditions.

Read the full article about America's health care system by Michael F. Cannon at Cato Institute.