The insurance companies have decided to let you and me in on a little secret: When the government says the health care bill is "revenue neutral," that doesn't necessarily refer to your personal cash flow.

Democratic politicians are denouncing health care insurance executives as traitors for spilling the beans in a new industry-funded study that predicts large increases in premiums if the health care reform plan passes: "The misleading and harmful claims made by the profit-driven insurance companies are politicking for corporate gain at its worst," said Sen. Jay Rockefeller, D-W.Va.

It is still not entirely clear what the Democrats' health care plan is. The industry study examines the plan put forth by Sen. Max Baucus, D-Mont., who has at least had the courage to propose specifics.

The bad news is that Baucus' plan will raise the cost of private health insurance. Why? In response to criticism of health care insurance mandates as new taxes, Sen. Baucus watered down his mandates on buying insurance, while maintaining requirements that insurers cover pre-existing conditions.

Therein lies the problem. Ask yourself: Why would you or I pay thousands of dollars for "insurance" if we can just buy insurance coverage to pay for bills when we get sick, and all for the same price as a healthy person?

Insurance cannot work like that. Insurance requires a pool of healthy people to cover those of us who get unexpectedly sick. That's why the requirement to insurance companies to cover all comers has to be accompanied by an enforceable requirement to individuals to buy insurance. Otherwise, the whole plan collapses.

Let it collapse. Neither mandate is in the best American tradition.

There is a common-sense solution to the problem: The federal government should override state laws and permit every American to buy catastrophic insurance coverage — say, over $5,000 — to cover the kind of unexpected large medical expenses that can bankrupt families. This is what insurance, properly speaking, is for.

What about ordinary medical expenses? Let us set up savings accounts using tax-advantaged dollars to pay for ordinary medical care directly.

What about people who cannot afford to pay for their own medical care? Use our tax dollars to subsidize the accounts of the poor and the working class and families with children; $900 billion could pay for a lot of medical coverage and medical expenses.

In an instant we could dramatically expand insurance coverage while reversing the perverse incentives that drive Americans to overpay for inconvenient medical care.

So you say the market is in bad repute these days among the cognoscenti? Meanwhile, I can't help but notice that each year the market brings me both things I need and things I want, delivered in ways that are convenient to me, for a price that gets cheaper every few years.

We can unleash the discipline of the market — the same market that gives us healthier food, cheaper books and less-expensive computers every year, more conveniently delivered — on a sclerotic, heavily regulated health care system.

If it costs more money to expand health care to more people, give that money to people to buy insurance for large expenses and to pay directly for routine medical care themselves.

Doctors, hospitals and communities will respond by delivering better medical care — faster and cheaper and more conveniently organized. Unlike health insurance companies, they will have no incentive to ration care by imposing institutional obstacles designed to cut costs by increasing wait times.

At the same time, you would eliminate the interference of insurance or government bureaucrats in the ordinary health care decision-making processes of patients and their own doctors.

Maggie Gallagher's column is distributed by Universal Press Syndicate.