As my friend George Leef points out in an e-mail to me, if government can lower firms' costs by paying workers' health-insurance premiums, why stop there? Why not have government also pay all expenses involved in hiring workers, including all wages? -- and pay for all property, casualty, and liability insurance? -- and pay for all raw-materials? -- and pay for all capital equipment? -- and pay for all R&D? -- and pay for all advertising? -- and pay for all production facilities and other real-estate used by firms? If government picks up the bill for all that firms produce, firms' private costs can be pushed down close to zero!
Imagine, then, how "competitive" -- how very efficient -- American industry will become!
To resolve the paradox, you just have to remember that subsidies require taxes, and taxes are paid by people.