By DAVID C. SMITH

Guest columnist

With health care costs at a crisis stage, there is no shortage of sweeping health care reform ideas in Washington and throughout the nation. No one will argue that reforms need to take place, but the fundamental question is: What type of reform do Americans want?

Over the past ten years, the cost of health insurance has risen at a rate of 10 percent annually, causing many employers to reduce benefits or increase the portion of the cost paid by their employees. This increase is due almost exclusively to three factors:

n New equipment, new drugs, and new procedures have come on to the market, at a higher cost than the ones they replace.

n Higher utilization of health care due to the aging of our citizens, but also the worsening health of many Americans due to obesity, smoking and lack of exercise.

n The increased subsidization of health care cost for Medicare and Medicaid recipients due to reductions in provider payments since 1997.

Whether you are discussing a single payer system or a state plan, every government solution calls for increased regulation and government control regarding how we finance our health care. These plans begin with radical changes to our current financing system (insurance), and in many of the reforms, completely do away with our current insurance system.

This is alarming for two reasons. First, health care costs are not expensive because of insurance; rather, insurance is expensive because of rising health care costs, and by the increased demand created by unhealthy lifestyles. Attempts to fix the financing mechanism, rather than trying to fix the rise in health care costs, does not address the real problem.

Second, while most Americans do not want government-run health care (a socialistic approach), the reality is that this is the ultimate end to any government solution. The architects of these specific types of reforms do not necessarily aspire to create government-run health care; yet, it is the only realistic way any government solution can control rising health care costs.

Private market reform solutions focus on creating competition and transparency to reduce or eliminate these fee increases. The private market was the inventor of transparency, as it created the tools by which consumers monitor both the cost and quality of the health care they receive. Additionally, the private market understands why health care costs are rising.

Any health care reform idea that takes the road of government intervention, and fails to address the fundamental problem of rising health care costs, will not succeed, based on my own experience.

We need to be sure that any reform chooses the path of a private market solution so that we can ensure our health care can be purchased in the free market both today and in the future.

David C. Smith is immediate past president of the North Carolina Association of Health Underwriters.