I had the opportunity to attend the recent New Mexico First event on health care. I was pleased to see so many concerned citizens take time out of their busy lives to get together and work out solutions to one of our state’s most pressing problems, but amazed at how complicated and convoluted the health care issue has become.

Much of the blame must be placed at the feet of Congress and the federal government that has created the misguided and bizarre incentives under which all states must operate. Health Savings Accounts, which give individuals greater control over their health care needs, were a necessary first step. But these somewhat complicated accounts would be unnecessary if Congress would heed President Bush’s call to offer to individuals the same tax incentives now given only to companies.

The fact that these tax incentives are given to employers is a historical anachronism that does nothing but place health insurance companies between health care consumers and their providers. Whereas socialized medicine and other “universal” models simply replace health care companies with government bureaucrats as our health care gatekeepers, giving individuals control over their health care dollars would restore that patient-doctor relationship. Unfortunately, corporate and union interests have teamed up to strangle this needed reform in the cradle.

Another change that Congress needs to make is to bring federalism to health care. One of the great strokes of genius made by the Founding Fathers, federalism forces states to compete with each other.

Unfortunately, in the area of health insurance, this concept has been lost as insurance companies have successfully walled off each state, thus protecting themselves from competition and subjecting consumers to costly mandates and regulations imposed by the individual states.

New Mexico, for example, has 45 mandates covering everything from alcoholism and acupuncture to TMJ Disorders. While such coverage may be nice to have, they add significantly to the cost of health insurance. The costs associated with New Mexico’s large number of mandates contribute to our having the second-highest rate of uninsured.

Legislation that would have allowed individuals to purchase insurance across state lines was proposed by Rep. John Shadegg, R-Ariz., and then-speaker Dennis Hastert, R-Ill., last year, but died. Absent congressional action, New Mexico can and should allow residents to purchase health insurance from out-of-state.

Any discussion of health care in New Mexico would be incomplete without an analysis of the perverse incentives created by Medicaid. Due in part to the generous federal subsidy the federal government gives New Mexico (a 3-1 match depending on the specific program), many of our elected leaders view Medicaid as a means of generating economic growth at the expense of taxpayers in other states.

This rationale was among the justifications for successful efforts to raise from $4,000 to $10,200, the earnings threshold for low-income adults under which they can still qualify for Medicaid. The change is expected to add an additional 18,000 adults to the program, costing the state “only” $11 million— and costing taxpayers in other states probably three times as much.

While the incentives are certainly there for New Mexico to expand Medicaid to the greatest extent possible, this is not going to lift the poor out of poverty or improve health care coverage. Instead, Gov. Bill Richardson and the Legislature should request that the federal government allow New Mexico to follow the successful welfare reform model developed in the 1990s by receiving its Medicaid money in the form of a block grant and developing unique, New Mexico-centric solutions to our health care mess.

Unfortunately, while each reform I have outlined above would simplify and restore some logic to the health care system we all know and despise, each faces strong opposition from certain entrenched interests. Nevertheless, there are sensible free-market solutions to our health care problems that will expand coverage dramatically while also enhancing the patient-doctor relationship and cutting costs.

It may seem easier to throw up our hands and demand “universal coverage” with the government in charge, but government policies created many of these problems in the first place. We should hardly expect the government, the insurance companies, and other special interests to give up their power under a “socialized” scheme.

Paul Gessing is president of the Rio Grande Foundation, a non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.