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Purpose -- The purpose of this paper is to present the three critical changes needed to reform the US health care system -- these changes will drive cascades of other beneficial changes. These three changes include the use of transparent market prices, alignment of incentives and systematic assessment and ratings of quality. Design/methodology/approach -- The paper used an analysis based on the literature on the comparison between non-market and market systems. The current US health care system is similar to the Soviet economic system, and the paper proposes moving it gradually to where it can respond to market-based signals. Findings -- The US health care system needs to adopt transparent and real pricing, independent quality assessment of health provider organizations and portable electronic patient records. These changes will lead to continuing cascades of innovation and improvement. Research limitations/implications -- The recommended changes will be opposed by vested interest groups, and so will be easier with regulatory guidance and encouragement. It would also be useful to protect against "regulatory capture" by interested parties during the change process. Practical implications -- Health care in the USA will gradually become better and cheaper. Health organizations will become more transparent. Regulators would have to set up and supervise private quality ratings agencies. Social implications -- Social implications of this paper include greater labor mobility and higher productivity, as well as increased competitiveness of the USA. Originality/value -- In spite of numerous writings on the subject, this issue has not been analyzed in this way. This paper is unique in the way in which it layouts the process of movement to a market-based system for the US health care system. [ABSTRACT FROM AUTHOR]