In his speech to the American Medical Association, President Obama stated, “Today, we are spending...almost 50 percent more per person than the next most costly nation.” The sophisticated listener understood the implications of Obama’s message: things that can’t go on won’t. Our medical costs, now nearly one-fifth of current GNP, twice that of food, can’t continue to escalate. Health care costs are growing at 6.7 percent per year, doubling in less than twelve years. This won’t be sustained.

Change is coming, and interest groups have mobilized. Politicians are concerned with the impact of reforms on their constituencies. But few are interested in how alternative proposals influence the behavior of patients, medical professionals, and third-party payers.

Elliot Justin, M.D., of Bozeman, and John Goodman, Ph.D., of Dallas are two individuals who understand how to achieve reform. Both understand that health care decisions, as all others, are made on the basis of information and incentives.

Rising health care costs are partially the result of the horribly perverse incentives facing both the patients and the professionals. Neither party has the incentive to consider costs. Being on Medicare with an insurance supplement, I don’t see a bill upon receiving medical care. Rather, some small residual charge sometimes appears later. Not facing a cost, I have little incentive to conserve on this scarce resource.

While not identical, the perspectives of Drs. Goodman and Justin are complementary. Goodman, President of the National Center for Policy Analysis (NCPA), is a health care economist. His focus is on institutions, generators of health information, and incentives. Justin, President of Swift MD, is applying information technology to the delivery of medical care.

Goodman writes, “Americans must be free to use their intelligence, their creativity and innovative ability to make the changes needed to create access to low-cost, high quality health care.”

Justin complements this by saying, “If we are really going to change health care we have to jump from the 19th century to the 21st century.” This shift means coordinating consulting physicians, patients, and medical records via phone and the Internet. All of these changes are seen as a threat to the traditional practice of medicine—and to the income of physicians. As Justin says, “The family doctors say, ‘You’re going to put us out of business.’ They want [people with minor ailments like an] ankle sprain coming to them. That’s how they make money.”

The Obama administration has proposals for universal coverage, surely a popular idea in a wealthy nation. Alas, its application implies serious problems, including rationing.

There is and always will be rationing. Scarce resources are either rationed or ruined. However, the type of rationing matters. Will we ration by queuing as in Canada, by price, or by expected utility? Wealthy Canadians come to the U.S. to avoid waits, and rationing by utility will produce a whole slew of new ethical quandaries. Should taxpayers, for example, pay for a healthy 87-year-old to receive a new hip?

What will be the effect on innovation if bureaucratic standards are imposed? American innovation today accounts for nearly 90 percent of the world’s new pharmaceuticals. And what will happen to patient-specific care arising from long-term doctor-patient relationships?

Champions of “universal” coverage don’t understand that equality can never be legislated. Whatever reform is adopted, those in politically powerful positions, and the truly wealthy, will receive the best care.

Will Obama’s reforms make taxpayers responsible for the diseases generated by the bad behaviors of others? If the answer is yes, attempts to control behavior will follow. As correctly stated by President Obama, “Because our health care system is so complex and medicine is always evolving, we need a way to continually evaluate how we can eliminate waste, reduce costs, and improve quality.” That “way” is consumer sovereignty. The job of the American government is to protect the ability to choose instead of choosing for the people.