Replace Medicare with HSAs
Medicare for the elderly is growing at an alarming rate. People with medical conditions have absolutely no incentive to shop around and reduce health care expenses. Comparison-shopping is necessary to drive costs down.
We can change incentives by creating Health Savings Accounts (HSAs) for the elderly. This is just like a savings account that earns interest and people can use it for their health care needs. The only insurance people will have is catastrophic insurance with a high deductible from a private insurer.
The size of HSAs will be large enough to cover 100% of the lifetime health needs for about 95% of the people. For those few who run though their money, they should have savings, family, friends, or some backup.
When a person dies, the money in the HSA goes to the charity of choice or the HSAs of their children. So every dollar wasted is a dollar less to their children. This is incentive to be frugal.
The HSAs will be a huge upfront cost but a great long-term investment.