While the folks in Washington talk about how to reform the health care system, many of the nation's employers and state governments are actually making it happen. They are finding ways not only to control costs, but also to provide better care.

The latest example comes from America's heartland - Indiana - where five years ago, newly elected Governor Mitch Daniels asked that a consumer-directed health insurance option, or Health Savings Account (HSA), be added to the conventional plans then available to state employees. He thought that the plan may interest a few of the state's 30,000 employees.

Today the HSA option has proven to be popular with more than just a few. This year, over 70 percent of the state's workers chose it and with good reason. The employees enrolled in the consumer-driven plan will save more than $8 million in 2010 compared to their co-workers in the old-fashioned preferred provider organization (PPO) alternative. That's a pretty nice pay increase for workers who have seen their salaries frozen for the last two years.

In addition to saving money on premiums in tough economic times, these Hoosiers are putting lots of cash away in their HSAs - some $30 million or about $2,000 per employee and growing fast.

Most importantly, the state says it is seeing significant changes in behavior, and consequently lower total costs. For example, employees who opted for the HSA are less likely to go to the emergency room, the doctor or be admitted to the hospital, and they are more likely to take generic drugs. Skimping on care, are they? The state says there is no evidence HSA members are more likely to defer needed care or common-sense preventive measures such as routine physicals or mammograms.

Yes, health care reform has already come to Indiana in the form a consumer-directed health plan. It turns out that, when someone is spending their own money, they are indeed far more likely to ask the questions and make rational choices.

Washington might want think about that before it enacts more top-down balloon squeezing.

Source: Mitch Daniels, "Hoosiers and Health Savings Accounts; An Indiana experiment that is reducing costs for the state and its employees," Wall Street Journal, March 1, 2010.