In an essay called Bleeding-Heart Libertarianism, I sketch a system for using a consumption tax with a negative-income-tax feature to replace government-provided health care, education, and income security.
Does the bleeding-heart libertarian approach seem harsh? Actually, the Welfare State is worse. The Welfare State targets much more of its largesse to people who are less needy. Medicare pays for hospital bills for everyone over 65, including millionaires. The school districts with the highest per-pupil spending rates tend to be those with the wealthiest residents. Many of the elderly who receive Social Security are well-to-do.