Currently, patients have little involvement in the choices and economics of healthcare. Doctors generally tell them where to go and what to have done. People don't worry about cost because insurance covers it. The system covers costs but smothers competition.

To cut costs, patients should be more directly involved in paying for services. Doctors and hospitals should have to make their charges available so patients could shop on the basis of cost as well as convenience. They would pay providers directly and then be reimbursed by their insurance company. Giving people choices will promote competition. Generally, prices will fall and service will improve. Don't believe it? Just look at Lasik. This laser eye procedure is not usually covered by insurance and was initially quite expensive. But as more providers entered the market, prices plummeted. Cosmetic surgery has also followed supply and demand.

Right now, every state has different rules, creating a crazy patchwork. This protects markets, not patients, and removes pressure to keep costs down. Benefits should be uniform for all Americans, not driven by local politics. Also, those who live a healthy lifestyle rarely get a discount on their insurance. Being able to buy coverage that fits you best from any company in the nation would be a healthy change.

No one should have to change insurance or their doctor if they change their job. And smaller firms should be able to work together to provide coverage without fear of antitrust laws. This would spread risk and lower premiums.

Instead of purchasing health insurance for employees, businesses should raise wages by the amount they now pay for insurance. This extra cash should be paid tax-free for employees to put into tax-free Health Savings Accounts. Using these accounts to pay for routine care means people would need insurance only for infrequent big-ticket expenses beyond a certain deductible. This would allow people to choose less-costly insurance with higher deductibles. It would also level the playing field for small business owners, independent contractors and self-employed individuals who must now pay for healthcare with after-tax dollars.

Specialized federal courts should handle healthcare claims, much as federal tax courts handle tax cases. This judicial expertise would benefit both claimants and defendants. Frivolous claims should be rejected, with plaintiffs paying reasonable defense costs.

Most government programs pay physicians and hospitals less than private insurance companies. For example, for a new patient pediatric office visit in California, Medicaid pays $22.90 while the median private insurance reimbursement is $41. Disparities like these cause providers to "shift costs" by raising fees for patients who use private insurance or pay cash. This has led to the closing of many inner-city hospitals that cannot shift enough costs because they have too many patients covered by low-paying government programs.

Public clinics that provide free care to those who cannot afford to pay are very important. Unfortunately, government funding of these clinics has decreased, and access to them has been complicated by insurance programs. Indigent patients have been pushed into lower-cost insurance programs, like Hawai'i's Quest, that enable them to receive care from private physicians and clinics. While it's an excellent idea to provide lower-cost insurance to those in need, what many require even more is easy access to high-quality care. Strengthening public health clinics will serve the indigent better, reduce the spread of communicable diseases, decrease "cost shifting" to the private sector and lower the overall cost of healthcare.

It will not be easy to move healthcare to a free-market model. However, it is worth the effort because the "Universal Care," government-HMO alternative would be far more disruptive and costly. The experience of government-run healthcare in England and Canada shows this clearly.

Dr. Richard R. Kelley, a retired pathologist, is chairman of the Outrigger Enterprises Group. This is the second of two commentaries Kelley has written on healthcare for The Advertiser. The first installment appeared in yesterday's Focus section.