The Fourth Rail of American Politics

It’s very hard - perhaps impossible as we’re all finding out - to take away an entitlement after Congress has brought it into existence. Any large entitlement program is a complex beast by necessity. How else can the government decide winners and losers without having a thick book of rules and regulations to accompany their taxpayer funded largesse? That makes unwinding any large entitlement program all the tougher. Especially if you try to clear up who wins (gets the entitlement) and who loses (pays higher taxes or fees or is shutout from tax breaks etc.).

And this entitlement is huge. Covering over 150 million Americans. Many of them relatively well-off. And it's untaxed even. No way you're going to be able to take that away from voters, are you?

No, not the ACA - though it made the problem worse.

Employer-based health insurance. Yes, your plan that your employer offers you is a tax-sheltered benefit. One that has led to enormous waste in health spending over the last 50 years. Arguably, even the last 60 or 70 years. What started during and right after WW II as a temporary untaxed benefit that enabled employers to effectively raise wages while avoiding wage controls, quickly became an entrenched benefit that Truman couldn't end. A temporary program with wartime roots became rooted and permanent.

When did this sort of temporary-arrangement-written-in-stone previously happen? Oh yes, income taxes and WW I.

Would it be politically possible - despite the fact that it would make economic sense if the goal is a free market for health insurance - to end the tax advantages that employer-based health insurance enjoys?

Yes, unfortunately. Unfortunately, because there are two ways to go about ending employer-based healthcare advantages.

  • End the tax shelter the employer-based plans have enjoyed for the better part of the last 75 years. OR
  • Give the same tax shelter status to individual (or family) plans bought on the private market.

Not hard to guess which approach would be favored by 95% of politicians. And ending most if not all of the additional mandates and regulations that Obamacare imposed on the employer-based market means taking goodies away from hard-working, well-paid, Americans. 150 million or so.Who currently pay some of the highest taxes in the developed world. Not likely to happen.

So, in effect the real third rail of politics has now become employer-based healthcare. An entitlement that's been around since WW II, and which most people don't think of as one. But any untaxed benefit that favors one group over another is nothing if not an entitlement. Call it the fourth rail of American politics, if you must.

Posted by Keeley at March 27, 2017 8:14 PM
Comment #414710


Aptly written, your analysis is very poignant. If the right was truly serious about limited government, it would put these tax subsidies on the chopping block right along with those other programs it wants to cut, but alas that never happens. The American electorate is too far to the left to stomach actual conservative policy.

Posted by: Warren Porter at March 27, 2017 10:04 PM
Comment #414712

“Who currently pay some of the highest taxes in the developed world.”

False. Not even close.

Posted by: phx8 at March 27, 2017 11:01 PM
Comment #414713

Good catch, I missed that bit.

Posted by: Warren Porter at March 27, 2017 11:21 PM
Comment #414724

Ah, good ole dependency.
It is not any one program that is “untouchable to the extent that any politician or public official who dares to broach the subject will invariably suffer politically”, it is dependency.
Sadly, we have thrown away everything good about our country and being dependent on government is no longer controversial, it is expected.

“The American electorate is too far to the left to stomach actual conservative policy.”

I’ve been preaching that for decades now. Well said Warren.

Posted by: kctim at March 28, 2017 11:03 AM
Comment #414726

Keeley couldn’t agree more, Employer based health insurance is a loser on many levels. It is a job killer, it keeps wages lower and it makes American companies less competitive in the global arena while, as Keeley noted, allows for wasteful spending. While it may be a “third rail” it needs to be addressed, although with the buffoons we now have running the show all we could expect is they will make matters worse.

I have watched our local school district not give raises to it’s employees for 3 years in large part due to the increasing costs of health insurance. The district is laying off this year and will be forcing the employees to pay for the entire cost increase of the employer health insurance despite not having any choice on which insurance company they will be paying.

Time to drop the scam and come to terms with Medicare for all.

Posted by: j2t2 at March 28, 2017 11:46 AM
Comment #414729

Ya know while they are at it with health insurance perhaps it is time to address privatized ambulance…umm.. service. Of course that would mean dependence on government to write some type of cost control regulations not to mention the lost of our freedumb to be grossly overcharged during a time of need.

Perhaps a Uber driver type of ambulance service would do the trick, at least we will be free…right?

Posted by: j2t2 at March 28, 2017 12:02 PM
Comment #414733

Uber driver type of ambulance service? Are you freaking kidding? Those greedy bastards make a profit doing what they do. We can’t have that nonsense going on.

I wouldn’t fret about it any, J2. The way you guys are going, you’ll all be ‘entitled’ to a chauffeur and personal a** wiper in the near future.

Posted by: kctim at March 28, 2017 2:00 PM
Comment #414741

Question for my Liberal Comrades.

Tell us what authority made the decision that Health Care is a “Right”?

Posted by: Royal Flush at March 28, 2017 5:58 PM
Comment #414747

I don’t believe Health Care is a “right”. It is a public good no different from military protection or elementary education.

Posted by: Warren Porter at March 28, 2017 10:41 PM
Comment #414765

Thank you Warren. Give yourself an A+.

Posted by: Royal Flush at March 29, 2017 4:21 PM
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