State and federal governments subsidize low‐​quality medical care and penalize high‐​quality care. They block innovations that would otherwise reduce medical prices. Congress even funds veterans benefits in a way that excludes these expenses from the estimated costs of prospective military action—arguably increasing the likelihood of military deployment.

The entire health care system must be fundamentally overhauled in order to put consumers in control of their health care decisions. In 2023, Cato’s Michael Cannon published a detailed road map for how to do just that: Recovery: A Guide to Reforming the US Health Sector. Cannon is often cited as a leading expert in health care policy and was named one of the most influential people in Washington, DC, by Washingtonian magazine four years in a row.

A crucial component of restoring Americans’ freedom to make their own health care decisions is restoring the right to control their earnings. To that end, Cannon is leading an initiative that aims to end the “original sin” of US health care policy: the tax exclusion for employer-sponsored health insurance, which penalizes workers who want to control their earnings and their health insurance.

Employers pay for employee health benefits by taking money—in total $1 trillion per year—from workers’ wages. Ending the tax exclusion for employer-sponsored insurance would give citizens control over their health care dollars—and in effect would be the largest tax cut in living memory.

Cannon has proposed ending federal tax penalties for workers who want to control their own health care decisions by expanding health savings accounts (HSAs)—tax-free accounts that put patients in control of their health care spending—into universal health accounts available to all US workers.

In March, Cannon moderated a policy forum on ending the tax exclusion with Massachusetts Institute of Technology health economist Amy Finkelstein, Harvard University economist Jason Furman, and other top experts. In July, Cato published an interactive online feature that tells the story of how the tax exclusion destroyed American health care: “The Original Sin of US Health Policy.” That month, National Review featured the study in an article titled “How One Income-Tax Policy Screwed Up American Health Care,” and major outlets, including the Washington Post and the Wall Street Journal, cited Cannon’s work on the Biden administration’s move to limit short-term health insurance plans.

In September, the House Ways and Means Committee approved legislation that reflects elements of Cannon’s proposal to expand HSAs. The Bipartisan HSA Improvement Act would allow taxpayers to pair HSAs with direct primary care (DPC) memberships and allow taxpayers to pay for DPC memberships with tax-free HSA funds. Further, this act would make the playing field between first- and third-party payment more level by indirectly increasing HSA con- tribution limits. The committee also passed the HSA Modernization Act, which would increase HSA contribution limits. The legislation demonstrates a political appetite for elements of Cannon’s proposal to use tax-free universal health accounts to reduce the tax code’s control over taxpayers’ health decisions.