RALEIGH – Millions of Americans, and some 16 percent of North Carolinians, lacked health insurance last year as measured by the federal government. Governments have done little to address this issue effectively, and the public policies that do exist tend to favor the interests of providers, big business, and the affluent, not those of lower-income households.

Am I restating flimsy, left-wing attacks on our current health-care system that I will now proceed to debunk? Hardly. These are valid observations about the shortcomings of federal and state policies regarding health care and health insurance, reflecting views I share.

Now, before plowing into the whys and hows of public policy regarding the uninsured, some clarifications. First, to be considered “uninsured” by the U.S. Census Bureau means to have answered a survey question never intended to measure the extent and consistency of health insurance. It does not mean that you lacked health insurance for an entire year, or for most of the year, or even more than a brief spell in between jobs. It also does not mean that you are ineligible for Medicaid, as many “uninsured” people are, in which case you are insured to the extent that if you show up at a health provider and consume care, it will be paid for by a health plan (Medicaid).

Finally, and most importantly, to be “uninsured” by federal standards is not to say that you lack health care. Too many politicians and commentators clumsily conflate the two conditions. The uninsured consume fewer medical services than does the insured population, certainly, but we are talking about gaps of 10 percent to 20 percent of average annual expenditure. Also, they are not a particularly unhealthy group, according to federal surveys – the vast majority report their health as excellent, very good, or good, with only 14 percent reporting it as fair or poor – which further illustrates why the uninsured population should not be equated with a population entirely lacking health care services, or with the very-small percentage who are chronically ill and thus truly uninsurable in the private market.

Still, whether you accept the often-cited Census estimate of 47 million uninsured Americans, or something closer to about half that many chronically uninsured Americans, some of them covered by Medicaid but not formally enrolled, there is still a large segment of the population that is outside the health-insurance market. The vast majority of these (90 percent, according to the latest federal data I saw) want to be in the market. They are not simply making a conscious choice not to buy insurance (as some young, healthy, middle-income or higher individuals do). But because health insurance is too costly and difficult to obtain, they either can’t afford it or don’t see it as worth spending their scarce dollars on.

Government is to blame for at least part of the problem. For one thing, federal tax and regulatory policies that encourage individuals to purchase health plans at the workplace confer significant financial advantages on relatively wealthy people who work for large firms, with corresponding financial penalties on those who work for small firms that lack an economy of scale to justify bulk-buying of benefits. State law further worsens the disparity by applying taxes and regulatory mandates on private health insurance. These increase the cost of health coverage significantly, while advancing the interests of provider groups lobbying their way into insurance coverage. But because of a federal law exempting self-insurance pools from state taxes and regulations, big business can and usually does escape these extra costs by self-insuring. Only smaller firms and the individual market for health insurance must carry this load.

Current policies benefit the affluent in another way, too. One of the largest government subsidies for health care in the U.S. is the unlimited exclusion of employer-provided health benefits from income tax. Obviously, the higher your marginal tax rate, the more valuable it is to be able to exclude thousands of dollars in health premiums from your annual, taxable compensation. Furthermore, income correlates with the likelihood that you are offered employer-based health benefits in the first place. A recent study (pdf) estimated that the average annual value of the health-benefit tax exclusion to families with income above $100,000 was about $2,700, while the exclusion was worth much less for middle-income families and an average of only $100 for poor or near-poor families.

I don’t believe that it is the proper role of federal or state government to redistribute income – that is, to engage in theft, no matter how deserving the intended recipient might appear. But as I argued in Investor Politics, I do believe that the tax code – writ large, including not only income but also payroll, property, and sales taxes – punishes families by failing to take proper account of the money they invest in human capital, including education and health care. That is, when families spend money to educate their members, or to maintain and improve their health, the families are investing in ways that will boost future taxable income. Just as the principal of retirement accounts, the amount you put into your IRA or 401-k, should be tax-free if the return are going to be taxed, so some portion of family education and health care expenditures should be tax-free. As a practical matter, given the various kinds of taxes paid, the most efficient way to respect this important tax-policy principle is probably to create a refundable federal tax credit, adjusted for the age and number of dependents and capped at a fixed amount. This would result in a net tax cut for families of modest incomes and a net tax increase for those with upper-incomes, but in this case that would rectify a current imbalance towards wealthier families and those working for large corporations (or government, actually).

As it happens, eliminating our current tax subsidies and biases in favor of a capped, refundable tax credits for families purchasing private health plans and services is an idea already embraced by a variety of policy analysts, Left and Right, and submitted as congressional legislation. Combining this policy with elimination of special taxes and regulations on health plans would result in a broader, more innovative, and more nimble insurance market in which large numbers of the currently uninsured could afford to participate. Restoring insurance to its proper role, by removing the remaining impediments to savings-based health plans, would also be welcome.

What would not be welcome is further government encroachment in an industry, health care, whose shortcomings already bear the unmistakable imprint of coercive interference and well-meaning nonsense.

Hood is president of the John Locke Foundation. Coming next week: cracking open the old chestnut about uncompensated care, cost-shifting, and why universal government-run insurance would supposedly save money.