Here’s a letter that I sent this morning to the Washington Post:

You and President Obama argue that, because Uncle Sam does not tax high-cost medical-insurance fringe benefits – so-called “Cadillac” plans – workers who get such benefits are over-insured.  Therefore, your argument goes, these workers overuse health-care resources and, as a result, unnecessarily drive up health-care costs (“Will President Obama defend the ‘Cadillac tax’ to cut health-care costs? ^[1]” Jan. 12).

In other words, you and the President worry that subsidized third-party payments of health-care expenses cause people to make health-care choices that are privately sensible but socially harmful – to make choices that result in the overuse health-care resources – and thereby to make health-care more costly than it would be without subsidized third-party payments.

So remind me: why are you and Mr. Obama so eager to increase the portion of Americans’ health-care expenses subsidized by a third-party (Uncle Sam)?

Sincerely,
Donald J. Boudreaux

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