Health Care

The Tax Loophole That Made U.S. Health Care Unaffordable

The employer insurance exclusion has chained workers to their employers, practically eliminated consumer price sensitivity, and suppressed wages.

Veronique de Rugy | 3.5.2026 2:45 PM

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America's health care system consistently ranks as the most expensive in the developed world. It's not, as some politicians claim, expensive because markets have failed. It's expensive because the market has been repeatedly blocked from succeeding. Until we're honest about that, any potential reforms will only address symptoms while ignoring the disease.

The health care market is hindered in many ways, but the core structural problem is simple: The person receiving care is almost never the person actually paying for it. Roughly 90 cents of every dollar is covered by a third party—an insurer or the government.

The arrangement severs the give-and-take relationship between provider and customer that disciplines every other sector of the economy. When someone else pays, no one shops around, no one compares prices, and no one asks whether a service is worth it. When someone else is paying, there is no reason to restrict one's consumption. The result is predictable: opaque pricing, resistance to competition, and no discipline to keep costs aligned with benefits.

Thus, this is not a debate about who........

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