Ron Paul: Keep Medicare and offer medical savings accounts

Updated 6:30 p.m. ET

Although he campaigns on his disdain for government involvement in the private sector, Republican presidential candidate Ron Paul on Wednesday said that he would preserve health care entitlements, including the Medicare program for the elderly and disabled, while trying to transition Americans into medical savings accounts.

"Probably the worst thing that we ever did was make medical care the responsibility of the government," Paul said at a meeting of the Republican Congressional Health Care Caucus. "I don't think our federal government should be any more involved in medical care delivery than they should be in delivering education to our children."

The House member from Texas, who was for many years a practicing physician, recalled the days before Medicare and Medicaid were created in the 1960s, when government was only accountable for the care of veterans -- and even there, government did a poor job, he said.

But Paul noted that as president, he would not immediately cut health care benefits, especially for the elderly and children. Instead, he wants to transition out of the current system by allowing people to set up personal medical savings accounts and letting young people opt out of Social Security.

"I take a very moderate approach," he said. "I'd be willing work toward sanity by not cutting health care benefits until we solve our problems with this horrendous financial crisis."

Paul also has called for the elimination of five cabinet departments -- Energy, Housing and Urban Development, Commerce, Interior, and Education -- in order to cut $1 trillion in government spending in one year.

Earlier in the day, Paul took aim at one his favorite targets: the Federal Reserve. He has been one of the fiercest critics of the Fed, even before it became a punching bag for other GOP presidential candidates.

Paul, who is enjoying a bump in recent polls in Iowa, called on voters to reject "fear tactics" on Election Day.

"There's no reason to fully trust everything our government tells us, especially when things are going badly," Paul said. "Whether it's on foreign policy or monetary policy, because they use the fear tactics to frighten people into 'Boy, the whole world is going to collapse unless we bail out the big banks and the big corporations.' "

Paul decried "the endless fear-mongering to scare the people and the Congress into spending money. If you didn't have the Federal Reserve, it would come to a halt. It wouldn't happen.... This has been such a grand deception."

Paul has argued that the crisis in the money markets in Europe and elsewhere can be resolved only when currency is sound and "when it is recognized and accepted as such by individuals, through the actions of the market, without coercion." He has pushed for a return to the gold standard.

"Confidence in the dollar is plummeting, confidence in the euro has been shattered by the European bond crisis, and beleaguered consumers and investors are slowly but surely awakening to the fact that government-issued currencies do not hold their value," Paul wrote in a recent op-ed. " ... Throughout history, gold and silver have been the two commodities that have most fully satisfied the requirements of sound money. This is why people around the world are flocking once again to gold and silver as a store of value to replace their rapidly depreciating paper currencies."

After his speech, Paul told reporters that he thinks he got only 90 seconds in the last candidate debate on Saturday "because I go after the status quo, and I'm afraid that they don't like to hear about that. Because I challenge the welfare state as well as the banking system as well as our foreign policy."

" I mean, the bailouts. Look at who they bail out. They bail out the wealthy and that's how the monetary system works at the top," Paul said. "The Federal Reserve serves the interests of these very rich people."