by Rod D. Martin
May 14, 2000

Americans in the 21st century have the best-trained doctors and nurses, the highest quality medical schools, and technology that is nothing short of revolutionary.

And yet, for all of that, our health care system is a mess.

Born in an era of wage-and-price controls (another Left Wing boondoggle), our system allows employers – but not patients – to purchase completely tax-free health care. That’s fine if you can get it; but aside from the fact that this setup is inherently unfair to small businesses and individuals, it also distorts and destroys the market: tiny groups of people in a handful of businesses and government agencies make the health care choices for virtually all Americans, choices that are prohibitively expensive for almost anyone else.

The result is greater and greater centralization, as more and more consumers seek relief from necessarily sky-rocketing prices. They are forced to look to HMOs – and the courts, and, increasingly, the government itself – to simultaneously provide care and protect them from the problems inherent in the system.

This, of course, doesn’t work: it’s like a crack-user increasing his dose to cure his addiction. The cure to our growing health care problem is not more centralization (or more government), but more freedom. And that freedom is possible only by giving people real choices – their own choices – as to how they want to invest their health care dollars.

First and foremost, individual Americans should be the ones who control their health care – the doctors they see as well as the treatments they get. No one else should be in a position to tell them what choices they may and may not make.

Moreover, every American should have real access to those choices. In America today, 43 million people do not have health coverage. Every year, that number grows by a million people. That’s just wrong. It is also maddeningly unnecessary.

The answer: a system that allows people freedom to buy low-cost, high-deductible health insurance, and to save for their health care needs just as they do now with IRAs for their retirement, all tax-free.

Many Americans think they have real health insurance, but they don’t. They have a system – and a complicated one – that works this way: employers prepay an estimate of next year’s health care costs for their employee. This (perversely) creates incentives for insurance companies to avoid people with illnesses, or deny sick people the quality coverage they need. It is not “shared risk”; it’s risk avoidance.

This convoluted system, devised by federal bureaucrats rather than health care professionals or health management organizations, is a growing nightmare. Yet quality health care does not have to be complicated. In fact, health care should be one of the simplest aspects of an American’s life.

Health care should be something Americans own, an investment, so to speak. All Americans should be free to purchase affordable, portable, private health insurance that covers catastrophic events. What’s more, if you leave a job, you should be able to take that coverage with you.

Finally, while Americans get the freedom to choose, health care providers should also be free (and actively encouraged) to create an engaging and thriving private health insurance market that meets the needs of its customers while treating them with dignity and respect. Americans should also have the right to know how much their employers are spending on health care.

The best – though not the only – way to accomplish this is through a system of Medical Savings Accounts (MSAs). MSAs work like Individual Retirement Accounts (IRAs). An employer or worker – or both – would be free to deposit money into the MSA. That money would never be taxed – not on the front end, not on the back end – so long as it was used for health care. And the individual consumer would control what his MSA paid for, not a bureaucracy, not an HMO.

An MSA would belong to you. It would follow you all your life, whether you were employed, unemployed, self-employed or retired. You would control how it was invested, you would choose what kind of catastrophic insurance to add on top of the MSA, and you would decide what deductible to pick based on how much was in your MSA. After twenty or thirty years in an MSA, many average Americans could afford a deductible as high as several hundred thousand dollars, with correspondingly low catastrophic premiums as a result. Those Americans would never again have to fear old age in the way our seniors do today.

MSAs wouldn’t be forced on anyone: that would completely defeat their purpose. They would, however, dramatically improve the quality of life of everyone who chose them, not least simply by returning control over health care to the patients themselves.

And that’s just the point: more government control will destroy even what good things we have. It is the flood of government regulations, mandates and price controls that has denied 43 million Americans health insurance in the first place. A perfect example is this: between 1990 and 1994, 16 states passed laws designed to help improve access to health coverage. The effort was a total disaster. By 1996, those 16 states saw their uninsured populations increase eight times faster than before.

Why? New rules and regulations made insurance prices increase, forcing many small business owners to drop coverage. Government actually killed the patient in its effort to provide a cure.

In the 21st century, health care should be about freedom – the basic principle on which this country was founded. Change, positive change, should be driven by consumers and the marketplace. It obviously cannot be driven by Washington.