Josh Barro had a good post yesterday arguing the private health insurance market is so heavily regulated and subsidized that it’s a de facto government program run through private companies. Instead of a progressive fiscal program being performed by tax collection and benefit distribution, it’s through tax subsidies to some and not others. He’s right about this, but he left out a point that explains a lot of the outrage about rate increases (David Frum’s premiums went up around 30 percent for a comparable plan.)
Imagine an alternate universe where we were implementing food stamps for the first time. Instead of increasing taxes on higher tax brackets to pay for it, the government set up a special computer system at grocery stores. Each time someone in those higher tax brackets stepped up to the cashier, their prices would be 30 percent more than they’d been paying. That same price would then be subtracted from poorer people’s grocery bills. Seeing the same groceries you bought last month ago jump from $100 to $130 would make even the most sanguine of bleeding-heart liberals grumble about how terrible that god damn Obama-stamp program was.
The point being, this is the rare case where hiding a tax increase probably makes the policy it’s supporting less popular. People see transactions in private markets (or what appear to be private markets) as separate from the responsibilities owed to others. Hiding redistribution in private product’s price increases siphons any of the communitarian spirit that citizens get from paying taxes in the first place.