It *is* income and should be taxed. I'm all for lowering income tax, but not with market distorting exclusions. Because of this subsidy you have:

1. A) Much higher cost of health care and lack of price innovation on procedures that would otherwise be cheap. People use health "insurance" to pay for everything instead of using indemnity plans for high-cost, unexpected procedures. As soon as you disassociate the buyer from payment, you don't have a market system (even if it's private).
2. B) It ties your access to affordable health care to your current employer.
3. C) An increasing rift between rich and poor. Like the mortgage tax deduction, health insurance deductions are regressive. Higher income people get more benefit, because on average they buy nicer houses and have fatter health insurance policies.

The above-mentioned problem only exists due to government meddling in markets. If employer provided health benefits were taxed as income, almost everyone would purchase indemnity plans, not plans that cover glasses, birth control and routine dental visits. We would actually have a free market and lower prices in non-catastrophic health care. We would also have more medical privacy.

You're ignoring quality/functionality as a variable. If a product or service has a perceived (utility) value significantly higher than its dollar value, the consumer is usually prepared to pay significantly more for small improvements in quality/performance. If my employer provided medical insurance is paying the first $1500 of the cost of my hearing aid, but my perceived value of a hearing aid is $2000, I buy the high end hearing aid for $3000 and feel like I got a good deal (since I only spent $1500 out of pocket, but would be willing to spend $2000).

I think you're confusing lawlessness with what you refer to as unbridled capitalism. You can't have property rights and competitive markets, both of which are central to capitalism, without rule of law. To be clearer, you should also write "interests of the people in power" instead of "interests of the state". When you write "interests of the state", people might mistakenly think that you care about the interests of the population at large, which you clearly don't.

You missed the point. Health insurance is tied to your employer in the United States because of the harmful tax code that subsidizes health insurance. Most people would not choose employer provided health plans if health-insurance income was taxed as regular income on the full dollar value. Insurance is for catastrophic things, not regular doctor visits. Your insurance company could require you to visit a dentist once a year, but it *shouldn't* be paying for it. Once individuals are paying for for non-catastrophic health care in large numbers (i.e. people have the incentive to shop around and question the validity of unnecessary procedures), costs will come down.

In order for *price* competition to work in a free market, the party paying for the service needs to be the same as the party receiving the service. In order to restore price competition, health benefits provided by employers need to be taxed as regular income. In the US, we've created a demand side subsidy that distances consumers from payment (a double whammy for increasing prices). The tax subsidies go much deeper than people realize, as health benefits are free from payroll taxes as well as income taxes. The current system is regressive (subsidizes the rich more), as wealthy people have better insurance and spend more on health care. Health benefits are income. If they were taxed as such, most people would choose catastrophic (high-deductible) plans, and routine medical care would deliver much more value per dollar spent.

I don't think anyone needs jail time, but if you need a head on a stake, throw apple engineers in jail for making a buggy browser. Google's JavaScript was running in an iframe element. Iframe elements from a non-origin server (i.e. not the page URL) were prevented from writing cookies using JavaScript, but when Google's code made ajax calls for setting the +1 button, the HTTP POST operation was sending/receiving cookies with Google's servers in the HTTP headers. This was a browser bug that borders on gross negligence, not a subtle problem that Google "hacked" around. "Hacking" would have been required to make the browser behave the way it was supposed to, not the other way around.