FORUM VOLUME 1 • NUMBER 4, January 2006/December 2005

HEALTH CARE IN THE U.S. IS BASED on an array of contradictions and paradoxes. The reason it’s so expensive to the country is because it’s so cheap for us individuals. On average, American households spend a mere $200 a month out of pocket on health care, roughly half of what they spend on entertainment and eating out.

Though we think of U.S. health care as primarily a private sector, free-market industry, the largest payers are governments, with 55 percent of the market.

Advocates of expanding government to put us all on a Medicaid-style singlepayer system, never miss a chance to quote statistics on the 45 million Americans who, at any given time, are without health insurance. The implication is that no health insurance means no health care. Yet the average uninsured American consumes $1,629 worth of health care annually, spending just $570 out of pocket.

Lessons from Canada
These paradoxes point to both the wrong and right ways to improve the U.S. health care environment. Boosting taxes and increasing government insurance would be a disaster. We only need to look to Canada to understand why. Global budgets and bureaucratic mandates don’t control costs. They merely shift them from easily seen monetary costs on government budgets to the less visible balance sheets of individuals and families who pay in terms of pain, suffering and lost wages.

Consider the Canadian Supreme Court ruling that Canadians in Quebec have the right to purchase private insurance. The decision asserted Canadians should not be forced to endure endless waiting times as the price of maintaining a public system. Justice Marie Deschamps remarked, “A public health monopoly without waiting lists is virtually an oxymoron.”

Last year, more than 800,000 Canadians were waiting for health procedures. The average waiting period from seeing a primary care doctor to getting treatment by a specialist, according to the Vancouver-based Fraser Institute, is 17.5 weeks. In addition to long waiting lines, Canadians suffer from rationed care and a lack of the latest technological equipment.

It’s these waits that caused two Canadian Supreme Court justices to write that “delays in the public health-care system are widespread, and that in some serious cases, patients die as a result of waiting lists for public health care.”

Freedom and Responsibility
The only solutions are more freedom and more responsibility. Third-party health coverage must be transformed from prepaid medicine to actual insurance, covering only costs that truly would bust a household’s budget.

Consumer-directed health care points the way out—moving our employer based system from a paternalistic- defined benefit pension model, to an empowering-defined contribution or 401(k) model. Health Savings Accounts, or HSAs, will accomplish this at both the individual and group level.

The grocery chain Whole Foods switched to an HSA-style health plan in 2003, offering high-deductible insurance and deposits from $300 to $1,800 each year in a savings account. The results have been outstanding. Employee coverage has increased from 65 percent to 95 percent. Medical claims dropped 13 percent, while hospital admissions plummeted by 22 percent. The company’s costs held constant in a year when similar employers with traditional plans faced increases of 14 percent.

HSAs are now available to individuals. To date, more than a million have been purchased, 37 percent by individuals who were previously uninsured. Expect your employer to offer an HSA soon. It’s a healthful development.

Sally C. Pipes is president and CEO of the Pacific Research Institute (pacificresearch. org). She is the author of Miracle Cure: How to Solve America’s Health Care Crisis and Why Canada Isn’t the Answer.