In the past several years, tensions have arisen between the quality and cost of health care, access to health insurance, and patient choice of physician and treatment. The solution imposed by government and big business has been "managed care" through "health maintenance organizations (HMOs)."

Doctors and consumers are not happy with HMOs, because under managed care, critical medical treatment decisions are often made by non-medical insurance employees, implemented (with varying degrees of reluctance) by physicians and received (with varying degrees of frustration or dissatisfaction) by patients. Managed care has marginally slowed the rate of increase of medical costs, but at the expense of quality and patient choice. It has had little impact on access to insurance.

Twentieth century American medicine, for all its technological successes, has been a triumph of special interest politics. Prior to World War I, organized medicine succeeded in closing half the medical schools in the country, thereby restricting the supply of physicians, and increasing the incomes of those who remained. During the Depression, Blue Cross and Blue Shield created the reverse of normal insurance: covering minor conditions, yet leaving major illness uncovered. The Blues, through effective lobbying, also obtained sweetheart legislation in most states which enabled physicians to name their own prices -- in effect, to be paid as much as they wanted. Both these situations remained true until the start of the current decade. (There has not been a "free market" in medicine in this country, within living memory.)

The effect of such an irrational incentives system was extreme cost inflation. And yet, despite all the waste, patients retained the ability to choose their physician and, to some extent, their treatment. There was enough competition between doctors to keep the medical system reasonably patient-centered. Doctors made decisions on medical (not economic) grounds, and patients were reasonably satisfied. Quality and patient choice were well-served.

Cost and access were not. Politically-influential employers found employee health benefits too expensive. Health insurance was priced beyond the reach of many families. Medicaid programs paid doctors less than their overhead, so access to primary care suffered, especially for poor women and children. Nonetheless, emergency care was excellent, and available to all.

Solutions are more likely to be found when all the relevant parts of a problem are taken into account. In recent health reform, cost has been almost the sole focus. Quality and choice have been largely ignored. Successful reform must consider all three, and also maximize access to quality primary and specialty care.

Carrots make better incentives than sticks. Managed care creates a paternalistic system which, in practice, rations care away from those least able to defend their interests towards those most adept at working the system. The much-touted "Health Consumer's Bill of Rights" accepts the legitimacy of top-down rationing, and merely provides a structure within which those denied care are allowed to ventilate their frustration. If they live long enough to do so.

We can do better than that.

The chief problem with managed care is that the locus of control is the insurance company; doctors and patients must settle for whatever crumbs fall from the insurance company's table. To bring this into line with our campaign theme, the insurance company is currently the center of the medical "wheel" - put there by the government. In effect, this means that the government, through its insurance surrogates, is able to determine what care families will receive.

We believe families - health care consumers - should be in the center of the medical "wheel," able to choose their doctor and have a say in their treatment (instead of being forced to settle for the minimum the insurance company thinks it can get away with providing). This can be done through high-deductible catastrophic health insurance and Medical Savings Accounts, which have been tested extensively in various states, and proven to preserve quality, control cost, extend access (including welfare patients) and maintain patient choice much more effectively than managed care.

The Medical Savings Account is the only solution which successfully addresses all four goals.

Medical Savings Accounts (MSAs) are quite simple, both in concept and in practice. They involve the purchase of major (catastrophic) insurance, which can be had for a fraction of the cost of low-deductible insurance. The consumer then deposits the difference between the catastrophic premium and the low-deductible premium (usually two to three thousand dollars a year) in a medical savings account, and then draws on that account to pay minor medical costs, up to the price of the deductible.

At worst, if there is a major illness, the consumer breaks even. (This happens about 6% of the time.) Catastrophic insurance pays all costs after the deductible is met. Other years, when there is no major illness, the consumer keeps the money remaining in the account, to use as needed.

To illustrate, in suburban Philadelphia, a typical family of four pays about $ 5000 a year for health insurance with a $100 deductible and a 10 to 20% copayment on major medical expenses. That same family can buy catastrophic insurance, which covers everything over a $3000 deductible, for about $ 1800 a year. Therefore, catastrophic insurance would be $3200 cheaper than conventional. They can put that $3200 into a Medical Savings Account which they can use to cover routine health expenses. They control that money and decide how it is to be spent.

In a worst-case scenario, they encounter a major illness and pay the first $3000 in expenses out of their MSA. Then their catastrophic insurance pays the rest. The result: after every medical expense is paid, they still have $200 left in their MSA. Which is theirs to spend as they wish. And, since they pay no deductibles, their total savings are much greater than just the $200. They suffer no medical debts.

Most families do not suffer a major illness. The average family uses about $600 worth of medical care annually; therefore, their MSA would have $2600 left at the end of the year, which is theirs to save or spend as they see fit. Many people seek no medical care whatsoever; they would have the entire $3200 at the end of the year.

The money is theirs, not the insurance company's - which is why MSAs have been fought against so desperately by insurance providers.

When MSAs are made tax-deductible, as has been the case, for some, since 1996, the situation is even more appealing.

Medical Savings Accounts return rationality to health insurance by increasing the coverage of major illness, and decreasing the coverage of minor illness. Universal (catastrophic) coverage of major illness removes the fear of medical bankruptcy. At the same time, by increasing personal responsibility for minor illness, MSAs give doctors and patients the incentive to stop overutilization of minor services - the single most important source of wasted healthcare dollars.