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  House Passed Health Plan Mixed Good Ideas with Deep Flaws  

Health care reform is always a balancing act. The current effort tries to do two hard-to-reconcile things at the same time: improve coverage and control costs. The complex measure passed by the House late Saturday does the first a lot better than the second.

In terms of expanding coverage for the uninsured, the House plan represents a crucial move in the right direction. The current system is a nightmare for the 45 million people in America without insurance and many more who could find themselves in the same situation in an instant. Under the House measure, millions would get insurance they now can't afford or which insurance companies have refused to sell them. Millions more who are a layoff away from losing insurance would eventually have guaranteed coverage.

In terms of raising new revenue and curbing unsustainable health spending, however, the House bill leaves much to be desired. It's based on a dubious commitment to cut costs.

As the action shifts to the Senate, some provisions in the House measure deserve to live, and others deserve to die.

Among the keepers:

*The grand bargain. At the heart of the overhaul effort is an implicit deal: Insurance companies get millions of new customers who will be required to buy insurance, many of them young and healthy. In exchange, insurers must stop doing the things that make the system so unfair for so many people. No more excluding people because they have pre-existing conditions, cancelling insurance when someone gets sick or imposing lifetime benefit caps that can bankrupt people with major illnesses. If reform accomplished nothing else, this would be an enormous improvement.

*Strong individual and business mandates. Requiring people to buy insurance is critical to making reform work. It spreads the burden, makes it possible for insurers to cover sick people who desperately need coverage, and eliminates free-riders who clog emergency rooms when they get sick. Unlike the Senate Finance Committee plan, the House bill has a tough-enough penalty to make the individual mandate credible.

The House measure also requires more businesses to provide insurance, as most already do. Only the smallest companies (annual payroll of less than $500,000) would be exempt. Since the thrust of health reform is to preserve employer-provided coverage, it makes sense to require employers to provide insurance and lessen the financial advantage held by businesses that don't.

*The public option. In too many markets today, only one or two insurers provide coverage. Ideally, a public insurance program would increase competition and provide a check on private premiums. The public option isn't the silver bullet its most ardent supporters believe, particularly the House form. But if structured properly, it could hold down costs for consumers and taxpayers alike.

As for the minuses in the House plan:

*Poor tax policy. To help pay for reform, the House opted to go outside the already bloated health financing system and levy a surcharge on the wealthiest Americans. That diverts tax money that could be used to reduce the federal deficit, and it provides ammunition to those who argue that health reform is little more than a massive redistribution of wealth.

A better way to help pay for medical reform and put pressure on rising costs is to tax "Cadillac" insurance plans that encourage overuse of the system. The Senate Finance plan does that, but the House balked because of ferocious opposition from labor unions, which often negotiate generous health coverage in lieu of higher wages.

*Not enough cost control. At a time of record budget deficits and soaring medical costs, the nation can't afford massive borrowing to fund new benefits. The Congressional Budget Office (CBO) says the House bill is paid for through taxes and spending cuts, but it remains to be seen whether Congress has the political will to carry through on unpopular Medicare reductions. In the past, it has often flinched. The House measure also does little to alter the "fee for service" model that encourages quantity over quality in the delivery of medical services.

*Virtually no malpractice reform. CBO says a serious effort to restrain malpractice awards, and the "defensive medicine" doctors practice to avoid them, could save $54 billion over 10 years. That's enough to make it a worthwhile addition to the bill, despite opposition from trial attorneys and their Democratic allies.

What the House did this weekend is an important, if imperfect, milestone in the decades-long effort to fix what ails U.S. health care. Without significant improvements, however, it doesn't deserve to become law.

*What do we recommend now.  Finding a plan or carrier and lock in your rates with a 24 or 36 month rate lock.  Due to the increase that carriers will have to pose on customers, we represent some carriers that will give you up to a 36 month rate lock guarantee.  Feel free to give us a call to discuss your options and learn about the rate lock guarantees today.

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