Despite South Carolina’s reputation for being a well-managed state, the facts are that mandated spending threatens, over time, to eat away at our financial security.

The U.S. Congressional Budget Office estimates that, under current law, federal spending as a percentage of gross domestic product will rise from about 20 percent — where it has mostly been since the end of World War II — to 34 percent by 2050.

And that’s just Washington. The states face similar problems, driven by the increasing expense of mandated programs such as Medicaid, which is already ravaging state budgets from California to New York.

Without serious Medicaid reform, South Carolina faces a major tax increase or cuts in services — or some combination of both — that no one will like and that will hurt the state’s competitiveness. Fortunately, a serious proposal for reform exists that could prove to be a model for the way other states will eventually tackle the problem.

Gov. Mark Sanford has proposed the establishment of personal health accounts for each non-disabled Medicaid recipient in the state. These accounts, which would be owned, would give each Medicaid recipient a vested interest in the quality and affordability of his or her own health care, because with ownership comes the power to choose.

The key concept here is ownership.

The Sanford plan gives Medicaid recipients a stake in the program. Rather than simply being forced to take what the state has to offer, they will be empowered to seek out more choices, better care, lower costs — all things that are anathema to the state-sponsored dependency culture.

The available plans could range from full-scale managed care to preferred provider organizations to a combination of catastrophic hospital insurance and cash available directly for less urgent needs. At a minimum, the Sanford plan is careful to specify, all approved plans would have to cover the mandatory services provided by Medicaid.

The requirement that the state approve the plans is an essential safeguard that protects some of our most vulnerable citizens from being preyed upon by fly-by-night operations.

The Sanford reform proposal has already drawn predictable opposition from out-of-state liberal special interests who make a good living advocating for the dependency culture. Their arguments — that services will be cut and that children and families will suffer — are the same ones they tried against welfare reform, another policy initiative that began in the states and has succeeded beyond everyone’s expectations.

The proposed reforms — and the Sanford administration is already seeking a federal waiver to put them into place — would mean price competition leading to greater savings for consumers and, in the long run, the state.

It may not seem like a pressing problem now, but left unchecked, South Carolina’s future Medicaid obligations threaten to cause serious damage to the state’s budget and economy. The Sanford reform points the state in the right direction, not just because they will produce budget savings, but because it will lead to healthier people. There is no reason not to do it, despite the naysaying and predictions of doom that those from outside our state might make.

Mr. Ravenel is a Charleston businessman and former candidate for U.S. Senate.