Moreover, President Clinton recently called on the 104th Congress to consider his reform proposals for enhancing portability, though he has been vague about what his proposals are.

The Managed Competition Solution.

Managed competition proposals, however, failed to adequately address situations in which employees moved out of their alliance or lived in one alliance and worked in another.

The Heritage Solution.

This proposal would have drastically restructured the way people purchase and companies sell health insurance. Almost 90 percent of all private health insurance is employer-based, primarily because of the tax law that permits the exclusion of employer-paid health insurance premiums from employees' taxable income. While there is much to be said for shifting to individually owned polices, Congress is not inclined to change the current system significantly.

Since it appears that we will keep an employer-based system for the foreseeable future, adoption of the following four reforms would make the current system stronger and fairer.

Expand COBRA.

The rationale is this: Since the federal government is providing a tax subsidy for employer-provided insurance, the government should make it easier for taxpaying employees to continue their insurance when they lose or change jobs.

Adopt Medical Savings Accounts.

There is an answer.

Make insurance guaranteed for insured job-switchers. One of the most popular health insurance reform ideas on Capitol Hill is to prohibit the insurance companies from refusing applicants with preexisting medical conditions. However, were Congress to prohibit insurance companies from denying coverage for any preexisting medical condition, people would have an incentive to buy health insurance only when they needed medical care. If they could buy health insurance when they were sick, why would healthy people buy it?

A more reasonable solution would be to prohibit preexisting condition exclusion periods only for those who lose their insurance due to a change of jobs. If an employee with health insurance leaves one company for another, the new employer's insurance company could not refuse or postpone coverage. But if a person has willfully let a health insurance policy lapse, the new protection would not apply.

The justification is this: Since government policy has created an employer-based system, public policy should ensure that people who have continuously paid into the system cannot lose coverage because of a job change. This approach not only would protect people who switch jobs, it also would encourage them to remain continuously covered.

Encourage state-based high risk pools.

The amount of money needed to fully fund state risk pools is almost trivial in the context of a one trillion dollar health care system. For example, in 1992 risk pool subsidies nationwide totaled only $170 million. One study found that extending risk pool insurance nationwide would cost less than one-tenth of 1 percent of the nation's annual health care bill.

We live in a society in which many people change jobs frequently. The lack of portable health insurance hinders that mobility. While these four proposals do not make health insurance truly portable, they do provide a politically acceptable means for helping people retain their health insurance coverage during job transitions.

Note: Nothing written here should be construed as necessarily reflecting the views of the National Center for Policy Analysis or as an attempt to aid or hinder the passage of any legislation.