Why does it cost the United States about $7,000 per person annually in our incomplete national healthcare system, while other major economic competitors provide universal coverage for about half that amount? The answer is quite simple: The federal government pays whatever the cost will be.

Virtually every expert agrees that the root of our runaway health inflation is the fee-for-service approach. Every visit, every test, every exam, is money in the bank for each serving doctor, hospital, and test center, so there is an incentive to do more and more of them. That is how doctors get paid -- and how they get protection from lawsuits. The cheapest malpractice insurance for a physician seems to be ordering multiple tests or CAT scans.

We have volume without value. There is no direct correlation between good health and higher hospital costs, higher doctor's payments, higher drug prices, and higher administrative costs. Atul Gawande and three fellow medical experts recently reported in the New York Times about a study of 10 regions that spent 16 percent less per Medicare patient than the national average but nonetheless had quality scores well above average. "If the rest of America could achieve the performances of regions like these, our healthcare cost crisis would be over."

The crisis is real. When we contemplate the pitiable scenes in Inglewood, Calif., where thousands waited all day for free dental work, eye care, immunizations, mammograms, and the like, we want to see everyone adequately insured. But left in place, the current system will drive our health costs up from a fifth of the U.S. economy to a third, with taxes sure to rise to meet the bill. The simple but critical question is what level of coverage is actually affordable and sustainable.

We must learn from our history, specifically from the birth pains of Medicaid and Medicare under Lyndon B. Johnson. His former senior domestic policy aide, Joseph Califano, wrote recently about that experience. "No one had discovered MRIs, PETs, CAT scans, organ transplants, and exotic and expensive cancer chemotherapy. None of us anticipated the extraordinary leap in life expectancy that would lead Medicare to spend a third of its budget during the last year of a beneficiary's life and Medicaid to pump an even larger proportion of its dollars into nursing homes . . . . Now," Califano wrote, "we are in the early days of a revolution in neurology, genetics, molecular biology, stem cell research, mechanical hearts and lungs, and domino transplants that promise all sorts of (costly) cures that don't exist today." In other words, we must respect the potential impact and future expense of medical discoveries, given what they did to Medicare and Medicaid costs, and be cautious about congressional clairvoyance that claims it can project healthcare costs 10 years into the future. That is why the estimate of future costs should not be limited to the 10-year budget horizon. If we don't look beyond that, we will repeat the errors of the recent prescription drug subsidy law that will make Medicare's costs soar.

What does history teach us? Califano answers: "The only sure way to bend the curve and curb the rate of increase in healthcare costs is to keep people out of the sick care system, to put as much profit in prevention as there is in acute care, and to put financial gain and pain into how individuals take (or don't take) care of themselves."

The Obama healthcare program has failed the American public on this critical standard. The independent Congressional Budget Office recently released a bombshell evaluation of the reform bills pending: They'd increase the federal deficit by at least $1 trillion over the next decade and even more in the second decade, and yet only marginally lower the number of uninsured in the nonelderly population. This is not what we thought we were getting.

Obama envisages financing his revolution in part by cutting Medicare, in part by raising taxes, and in part by leaving it uncovered -- all so that he can extend benefits to those low-income uninsured individuals. The CBO estimated that this would add at least $239 billion to the budget deficit over the next 10 years, and this after increasing taxes by almost $600 billion -- not to mention the cumulative shortfall in the second decade. Then it would add up to more than $800 billion.

It is a fatal flaw of the pending bills that they fail to control costs. They also shore up an anachronistic employer-based system that fails to give the mobility required when the average person has changed jobs 11 times by age 40.

The CBO could not have been clearer when its head, Douglas Elmendorf, told a congressional hearing: "We do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount. And on the contrary, the legislation significantly expands the federal responsibility for healthcare costs" and the cost "curve is being raised," he said.

You wouldn't know this by listening to President Obama. His reform, he says, will insure the uninsured, control runaway health spending, subdue further budget deficits, preserve choice, and improve the quality of care. As Washington Post columnist Robert Samuelson put it: "Because the president is so well spoken, he has the ability to make misleading statements sound reasonable or sophisticated. Still, they are misleading."

Even the president's objective is off the mark. He says any bill should be revenue neutral. But "neutral" won't do it. We have to radically reduce costs that are bankrupting us and pricing more and more people out of care. Revenue neutrality leads us down the same path to insolvency that Obama himself has said is the problem and is unsustainable -- unless, of course, you compensate for the increased costs by raising taxes. But those very revenues must be kept available if we ever are to close the looming structural budget deficit that is such a threat to the long-range health of the economy and has created so much anxiety in the American public. And, by the way, the deficits are even larger on an ongoing basis because Medicaid expansion and insurance subsidies don't begin to kick in until 2013, whereas the tax surcharge Obama proposes would apply beginning in 2011, distorting the real costs.

This may sound pessimistic, but it's a pessimism that is widely shared among experts, including former Secretary of Health and Human Services Mike Leavitt. It doesn't help that Obama ruled out taxing employer-provided health insurance, which could have raised $3.5 trillion over 10 years. Even a modest reduction or a ceiling on employee healthcare benefits to the current average of $13,000 annually would raise more than $1 trillion over the next decade and also discourage gold-plated insurance plans for top executives that promote excessive consumption of health services.

Obama has also failed to address the insane costs and arbitrary awards of the epidemic of malpractice suits. The Democrats' lust for large donations from the trial lawyers does not justify its consequence. Doctors order tests and procedures for no reason other than to defend themselves from lawsuits. Defensive medicine wastes billions of dollars without benefit to the patient, raising the cost of healthcare by as much as 18 percent. Nor has the president kept the healthcare negotiations an open process. It was recently revealed that the administration cut a backroom deal under which the drug companies will ante up a maximum of $80 billion in savings in return for the very valuable promise that Medicare won't be allowed to negotiate prescription drug prices. The deal also, astonishingly, committed us not to import cheaper drugs from Canada. This flies in the face of what Obama endorsed in the campaign. How could he buy off the drug industry in a secret deal when he once asserted, "I don't want to learn how to play the game better; I want to end the game playing"? A headline in the Washington Post called this "change we can't believe in." Wasn't this supposed to be the new politics that put the interests of the people above the special interests?

We simply must take a different approach. We want detailed, specific proposals for cost-effectiveness. Why is it that 74 regions give high-quality care at lower cost? What mix of penalties and incentives can be built into the system to make the high-cost regions reform themselves? The costs in Florida, for example, are almost double those in Minnesota, with no better outcomes. Why? Because doctors have become entrepreneurs in many parts of the country, setting up their own clinics, buying expensive diagnostic equipment, and then giving patients the works, paid for by our fee-for-service reimbursement schedule without providing any superior outcomes for patients. The higher-spending regions have more hospital beds, more physicians, and more specialists, and patients are more frequently hospitalized and spend more time in intensive care units, see physicians more frequently, and get more diagnostic tests and CT scans than identical patients in lower-spending regions. Yet there seems to be little relationship between better access to healthcare and better quality of care.

The public cannot go on underwriting whatever therapeutic projects are chosen by patients and revenue-minded physicians, irrespective of whether they yield a proven benefit.

And a dose more imagination, please!

Califano recommends requiring insurers to pay for preventive services like regular physical exams and vaccinations for flu and pneumonia, as Medicare does. Patients who fail to take the opportunity and then get the disease should have to pay the sick care costs. He urges the government to undertake a saturation public health campaign: "There was a time when seat belts were for sissies, smoking was chic, and AIDS was a social curse. Now every driver buckles up, smoking has been cut in half, and AIDS is recognized as a preventable disease. We must do the same with excessive drinking and obesity." He would sharply tax alcohol and tobacco, since almost 30 percent of healthcare spending is caused by smoking and excessive drinking.

We cannot give everything to everybody so that every choice and every procedure will be available in a fee-for-service delivery model. We must increase consumer sensitivity to costs instead of implying to most Americans that they are getting a better healthcare system for free and then making one small group pay for improvements. We must migrate from the fee-for-service reimbursement model and try models with pay-for-performance adjustments and audits to review their effectiveness and prevent undertreatment. We must aim to have patients copay for expensive elective diagnostic tests and optional surgery, with means testing so that poorer patients will not be disadvantaged.

So here it is: The Obama administration's rush into expanding coverage verges on the reckless. We must first change the structure of healthcare and then look to expanding coverage. The American public has come to realize that having too much debt in the form of mortgages or credit cards has consequences; and a majority now feels they would rather not enter a healthcare reform program if it is going to expand the national debt. A recent Rasmussen poll has 53 percent opposing Obama's reforms (44 percent strongly) and just 42 percent supporting them (26 percent strongly).

The priorities have to be reversed. Cost containment should come first.