Imagine people having restaurant insurance. Every time they ate out, they would just send their insurance company the bill. They would probably dine more at El Gaucho and eat less Top Ramen, right?

As crazy as that sounds, it is essentially how health insurance works. Healthcare costs go out of control because consumers aren’t paying for their medical expenses.

Moreover, healthcare providers lack incentive to offer competitive prices because their customers are just passing the bill to insurance companies. This was the way that John Stossel made his illuminating comparison on his (20/20) ABC special “Whose Body is it, Anyway? Sick in America.”

As a consequence, Americans avoid paying for their unhealthy lifestyles and have less fiscal impetus to stay healthy.

The National Diabetes Information Clearinghouse estimates that the diabetes epidemic now costs $132 billion a year to the U.S. economy. As Stossel pointed out to his guest Michael Moore, one of the main problems with healthcare costs is: “Frankly, there are a lot of people that look like you Michael.”

Since these higher healthcare costs are passed on to insurance providers, they create higher premiums. About a half of Americans get health insurance through their employers, so businesses are often the ones who endure the burden of higher premiums.

However, there are many Americans who are between jobs, work independently or can’t get affordable health insurance through their employer. Individual health insurance for these people is getting increasingly expensive, and that pushed the percentage of Americans without health insurance to 16 percent in 2005.

Another reason for the increasing cost of medical care in America is that medical malpractice lawsuits are still largely unregulated. The scam is that ambulance chasing trial lawyers file class-action lawsuits on behalf of victims of healthcare errors. These are often filed in local courts where juries are duped into covering not just the cost of the accident, but also granting millions of dollars for “pain and suffering” to the victims and their families.

The trial lawyers and courts then pocket about half of this settlement. The insurance companies pay for the damages and are forced to raise their premiums; then the cost gets passed onto consumers.

Since the Association of Trial Lawyers of America has been consistently one of the largest Political Action Committee contributors to Democratic federal candidates in recent elections, the scam continues.

The increased rates then hurt the economy.

The cost of providing employees with expensive health insurance can discourage the hiring of new employees, like at Ford and General Motors.

In the same way that excessive defense spending once crippled Soviet Russia, healthcare consumes more and more resources to the point where it’s been draining resources from other sectors of the economy.

The percentage of U.S. GDP spent on healthcare is now running at about 15 percent, as opposed to 5.1 percent in 1960. While some of this can be explained by research and development, healthcare is consuming more resources, while becoming increasingly unaffordable.

The Democrats’ solution doesn’t address these costs. It only pushes a move toward a government-provided universal healthcare system, which still fails to address the sources of increasing costs. Their plan would force healthcare to be rationed by long wait times instead of higher prices and transfer these exorbitant costs to the American taxpayer.

A different solution ––— the federal government could provide Americans citizens with healthcare savings accounts, like an IRA. This would introduce more incentive for consumers and healthcare providers to control prices and costs.

It would also make it easier for people to switch employers, since they would not have to leave their h ealth savings and coverage behind. Healthcare costs would be distributed more equitably instead of piled on the backs of employers, insurance companies and self-insured Americans.

There is stiff opposition to these healthcare saving accounts, because President Bush proposed them. Democrats also don’t like it because it could work. Just like in Iraq, if the Republicans fix the problem, then the Democrats can’t swoop in with surrender in Iraq and a universal healthcare system.

There are two options for fixing healthcare in America. We could move to a universal healthcare system that wouldn’t reduce costs and just heaps them on taxpayers instead. We could have some real non-partisan legislation, reform medical malpractice and embrace free market solutions like health savings accounts. Real solutions that reduce costs are something that mature observers are serious about, but are lost in the infantile dreams of Democrats who simply crave more government power.

[Reach contributing writer James Foxcurran at opinion@thedaily.washington.edu.]