The bipartisan “gang of six” in the Senate wants to fine employers whose workers choose Medicaid, the US public healthcare system, rather than more costly insurance from their company. The House wants to impose an 8 per cent payroll tax on all but the tiniest companies that do not offer healthcare. These damaging proposals show that both political parties remain deeply confused about the roles of government and corporations in a modern economy. Their premise – that companies have a duty to provide health benefits – has such perverse consequences that it may doom reform efforts altogether.

America’s unique employer-based healthcare system may have made sense 50 years ago, when healthcare was cheap and business faced little global competition. But today’s circumstances are radically different. Soaring health costs strangle business and absorb cash that could otherwise go to wages. The link between healthcare and employment explains why millions of Americans have lost coverage during this recession. Budding entrepreneurs with ill spouses or children stay in jobs they loathe for fear of losing the insurance they need. Keeping employers at the core of the welfare state is bad for business, bad for the economy and bad for families.