"The story behind the creation of the HMOs is a classic..."

"The story behind the creation of the HMOs is a classic illustration of what economist Ludwig von Mises once said: government interventions create unintended consequences that lead to calls for further investigation, and so on into a destructive spiral of more and more government control. During the early 1970s, Congress embraced HMOs in order to address concerns about rising health care costs. But it was Congress itself that had caused health care costs to spiral by removing control over the health care dollar from so many consumers in the 1960s, and thus eliminating any incentive to pay attention to costs when selecting health care. Now, Congress wants to intervene yet again to address problems caused by HMOs, the product of still earlier interventions.

Now the HMO's are all but universally unpopular, the very politicians who brought them to us are joining the bandwagon to denounce them, hoping the American people will forget, or never be told, that the federal government itself virtually mandated HMOs in the first place.

Consumer complaints about insurers and HMOs compel politicians to draft new laws and more regulations to curry voter favor. More regulations breed more costs, limiting more choices, causing more anguish- and the cycle continues.

The most obvious way to break this cycle is to get the government out of the business of meddling in health care, which was far more affordable and accessible before government got involved. Short of that, and more politically feasible in the immediate run, is to allow consumers and their doctors to pull themselves out of the system through medical savings accounts. Under this system, consumers could save pretax dollars in special accounts. Those dollars would be used to pay for health care expenses, with patients negotiating directly with the physicians of t heir choice for the care they choose, without regard for HMO rules or a bureaucrat's decision. The incentive for the physician is that he gets paid as the service is rendered, rather than having to wait months for an HMO or insurance provider's billing cycle.

With the cash for the MSAs coming from pretax dollars, most Americans could afford deposits that would cover routine expenses that families experience in a year. Insurance would tend to return to its normal function of providing for large-scale, unanticipated occurrences, and would become far more affordable." - Pages 85-89 of The Revolution, A Manifesto