HEALTH REFORM - THE GOOD, THE BAD, AND THE BOTTOM LINE

The Health Security Act is a pragmatic plan for achieving universal he alth insurance coverage for a broad package of benefits at reasonable cost. It proposes necessary and reasonable changes in insurance market practices and administrative structure. It finances the reformed syst em with a credible combination of achievable cost savings, mandatory p rivate-sector payments, and limited ''sin'' taxes. Political constrain ts-the inability to tax openly or redistribute tax subsidies-result in weak incentives for consumers to choose low-cost plans and an ineffic ient scheme for providing subsidies to the poor. The act also unnecess arily restricts and regulates fee-for-service plans and the training o f health workers. We propose changes to correct the act's weaknesses w ithout compromising its basic objectives.