How to improve health bill

We come from different ends of the political spectrum, but we agree that our health-care system is unsustainable because of costs. Doing nothing would allow future deficits to explode, leaving our children to clean up the mess.

The Senate Finance Committee's bill - also known by the name of the committee chairman, Max Baucus (D., Mont.) - is imperfect, but it is the most realistic vehicle for accomplishing the reform our health-care system desperately needs. We offer three suggestions for improving it.

Cap the health insurance tax exemption. The proposed excise tax on high-value insurance policies should be replaced with a more straightforward cap on the tax exemption for employer-paid health insurance premiums. It should be at the national average of around $13,000 for families and $5,000 for individuals. This is the most certain way to pay for subsidies to help the uninsured buy coverage while actually holding down the growth of costs by discouraging overinsurance.

Limiting the tax exemption signals the cost of insurance to the patient. It would reduce federal spending by about $500 billion over the next 10 years, as compared with the $200 billion raised by the excise tax. The extra money could be used to make insurance more affordable.

Expand insurance choice. Congress should adopt an amendment offered by Sen. Ron Wyden (D., Ore.) that would allow more people to have a choice of health insurance.

The Baucus bill sets up markets (called exchanges) through which uninsured people and small businesses would purchase insurance. A variety of regulations would be imposed on policies sold through exchanges, such as requirements that they cover preexisting conditions and limit premium variation. The idea is that individuals exercising free choice and insurance providers competing will hold down premiums, slowing cost inflation.

The problem is that most Americans will not be able to shop on the exchanges as the bill is written. And about half of those insured by employers will have no choice because only one plan is offered, while an additional third will have a choice of only two plans.

The Wyden amendment would open exchanges to people who do not like their employer-provided policies. It would let them take two-thirds of the premium dollars being paid by their employers and add it to their own money to buy insurance. The Congressional Budget Office has scored the amendment as budget-neutral.

Raise the age of Medicare eligibility. As many more baby boomers begin retiring over the next decade, Medicare will not be sustainable.

For those covered by Medicare now, we propose no change. For those who will turn 65 before Jan. 1, 2014, we propose no change. However, for the heart of the baby-boom generation and later, we propose that the eligibility age for Medicare rise by two months per year starting in 2014, stopping at age 67 in 2025. This means someone who will turn 65 on Jan. 1, 2014, will now be eligible for Medicare on March 1, 2014, and so on.

This will reduce the federal deficit by $85 billion over 10 years, but the savings over the ensuing decades will be in the trillions. A more aggressive policy would continue to raise the eligibility age until it reaches 70 in 2043.

Regardless of how high the age is raised, we need to start doing this soon. It will not be painless, but we are confident that the baby boom generation does not want to saddle its children and grandchildren with unending debt.

If you do not like this idea, then what would you like the Medicare payroll tax to be? At its present rate, it is not high enough to finance the care of the baby boomers.

The Baucus bill was voted out of committee Tuesday and will likely be changed further before it is brought to the Senate floor. We hope our cost-saving suggestions - and others like them - will be considered as this important reform effort moves forward.