ANDRES/CAPRETTA: Realistic options for the uninsured

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By Gary Andres and James C. Capretta

OP-ED:

Polling data confirm Americans are dissatisfied with the health-care status quo, and rightfully so. Today, health insurance for too many families is unstable, and the provision of health care is often inefficient, bureaucratic and of low quality.

But, despite the problems, health care is not on the verge of collapse. Most Americans, especially those working for larger employers, still have good insurance and ready access to some of the finest medical institutions in the world. The first rule of health legislation, like medicine, should be "do no harm." Voters want improvement, but they don't want politicians taking needless risks with what they have today.

Moreover, despite regular promises of Herculean change, our health-care system is too big, too complex and too dynamic for Washington politicians to "fix" in one piece of legislation, anyway. That kind of thinking reflects hubris, not sound analysis.

Sen. Barack Obama's health- care plan is a case in point. It would: impose a job-killing "play or pay" tax on every American employer; require all insurance to meet federally imposed standards; stand up a government-run insurance option built on arbitrary price controls with tens of millions of enrollees; and pile massive new federal entitlements on top of the unaffordable ones he does nothing about. All of this is proffered without the slightest worry that the federal government may not be up to the task of running one-sixth of the national economy.

Sen. John McCain has a far better plan. He recognizes that too much centralized government control would put quality care at risk. Instead, he favors a decentralized reform, with families exercising more power and control over their health- care decisions. The McCain plan would convert today's tax preference for employer-paid premiums into a refundable tax credit, which would foster the competition to deliver better coverage and services at a lower cost.

Unfortunately, even if Mr. McCain wins the presidential election, it will be difficult to pass a market-oriented plan in a Democratic Congress. Conservatives should therefore be ready to offer realistic options for covering segments of the uninsured even as they continue to push for the McCain reform vision.

One such idea would be to provide a new, private-sector option for job seekers. Many in Washington seem to think the uninsured are all the same and all permanently lack insurance. But, in fact, many uninsured Americans are workers experiencing a temporary break in coverage while they are between jobs. According to one study that looked at four years of data, about one-quarter of the uninsured regained coverage within four months of losing it, and another fifth did so within a year.

These workers would benefit greatly from an inexpensive insurance plan sponsored by former employers to bridge those gaps in coverage. Under current law, employers must offer separated former employees the option to stay enrolled in the company's health plan for up to 18 months. But since workers must pay the full premium - without the tax advantages employers enjoy - the sticker shock is enough to scare off most middle-class families. As a result, workers generally don't sign up for continuation coverage unless they are in very poor health.

The option to stay in a former employer's health plan could help many more working families if employers arranged for the coverage to be funded in advance - well before the financial distress of unemployment hits.

Contributions for continuation coverage could be accumulated in dedicated savings accounts on employees' behalf or used to pay for an insurance rider. Firms with high turnover might prefer the funding option to minimize cross-subsidization of short-timers. But firms with low turnover could offer insurance protection against the full cost of maintaining health coverage during a job transition. Back-of-the-envelope estimates indicate that the premium for such bridge insurance could be as low as 3 percent of total plan costs for an employer with 10 percent annual employee turnover if half of those eligible took it.

There are real problems in American health care that need the attention of lawmakers, but Mr. Obama's plan is built on the flawed premise that the federal government could run it all better if only given the chance. Mr. McCain is right to oppose taking such a risk with Americans' health care. And he is also right that the answer is to give consumers more options and choice, not less.

Reliable bridge coverage for job-seekers would be a good place to start.

Gary Andres is vice chairman of Dutko Worldwide. James C. Capretta is a fellow at the Ethics and Public Policy Center.