The False Hope of a Limited Government, Built on Tax Breaks

In the early years of the Reagan Revolution, Senator Robert Packwood, then the powerful Republican chairman of the Senate Finance Committee, offered a robust — if unusual — defense of the tax exclusion for employer-provided health insurance: It prevented the government from getting bigger.

“The one reason we do not have any significant demand for national health insurance in this country among those who are employed is because their employers are paying for their benefits,” he argued. “I hate to see us nibble at it for fear you are going...