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Health-Care Balance

A sudden downpour of pragmatism last week washed away election-year gridlock in Washington as Congress passed, and the president said he would sign, significant welfare and health-care reforms.

President Clinton got at least half a loaf on the two issues he laid down as priorities at the beginning of his term. Now he can claim he delivered on both, and Republican challenger Bob Dole is deprived of yet another issue. The GOP Congress devoutly wanted more accomplishments to show voters as the large freshman class scrambles for reelection.

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The health-care bill, co-sponsored by Sens. Nancy Kassebaum (R) of Kansas and Edward Kennedy (D) of Massachusetts, provides that employees can keep health insurance when they change or lose their jobs, regardless of any pre-existing condition. If not eligible for group insurance, an employee could change to an individual plan, although this would cost more. Insurers can deny health coverage for only 12 months for pre-existing conditions. Self-employed people can deduct 80 percent of insurance costs by the year 2006, up from 30 percent now, and the bill provides tax breaks for purchase of long-term care insurance.

In the key compromise, Congress agreed to test tax-deferred medical savings accounts (MSAs). Insurance companies can issue up to 750,000 policies for people who are self-employed or who work for businesses with 50 or fewer employees. Employees and employers will pay monthly premiums, part of which will be used to pay for high-deductible "catastrophic" insurance to cover major injuries or illness. The rest will go into a tax-exempt savings account that employees can use to pay routine heath-care expenses.

Proponents of MSAs, mostly Republicans, say they will offer consumers greater and wiser choice in health-care decisions - money not spent at the end of a year can stay in the account.

Critics, mostly Democrats, worry that MSAs will attract mostly healthier and wealthier people, thereby draining the basic insurance pool and driving up rates for everyone else.

Provisions for coverage of mental illness on a par with physical problems were dropped from the bill. Opponents argued the added costs would run to tens of billions of dollars.

The new law is a welcome change from the administration's original approach, which tried to restructure one-seventh of the nation's economy in one fell swoop. That was too much, too fast. The bill should mean that as many as 25 million more Americans will be able to get insurance, although it will not necessarily come cheaply. In addition, the MSA pilot program may not provide clear answers about the effect broadly available MSAs would have on the system.

Still the bill is a good one: It strikes a good balance between making health insurance more available and too much government involvement in the health-care sector.

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