Bruce Bartlett argues for a Value Added Tax to fund health-insurance expansion. Land O’ Goshen! A brand-new tax — on top of the income and capital-gains tax hikes already looming? We don’t need the government controlling even more of our health-care dollars: The government needs to return the health-care dollars it’s taxed away from us, either directly or indirectly (by giving our employers a tax break that we don’t get if we buy our own health insurance.) But the real jaw-dropper is his claim that “One of the reasons that Social Security and Medicare have worked so well is that they have specific payroll taxes that fund their benefits. This is important both economically and politically. Politically, people believe they have paid for their benefits. This has made it impossible to ever meaningfully cut Social Security benefits, just as Pres. Franklin D. Roosevelt intended. When explaining why he instituted a payroll tax rather than fund Social Security out of general revenues, Roosevelt said, “We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions. . . . With those taxes in there, no damn politician can ever scrap my Social Security program.”

In a sense Bartlett is right: Because these programs are funded by dedicated payroll taxes, people think they’ve “earned” their Social Security and Medicare benefits, which keeps these Ponzi schemes alive long after they should have collapsed. The Medicare Hospital Insurance (Part A) expenses will be $20 billion greater than payroll taxes this year, and the mythical “trust fund” (historical, excess payroll taxes that are actually used to fund the government’s non-Medicare spending) will be empty by 2018. Furthermore, Medicare Part B premiums, deducted from seniors’ Social Security deposits to pay for doctors’ visits, cover only one quarter of the cost of that program. For the Medicare Part D prescription-drug benefit (President Bush’s greatest health-care blunder), premiums cover only about 11% of total costs. Overall, general revenues pay for about 53% of the Medicare budget today — but try telling that to a senior who prefers to believe that he has paid for “his” Medicare.

Real health reform comes from reducing taxes, not piling them on.

— John R. Graham is director of Health Care Studies at the Pacific Research Institute.