In the past the two days we've examined recent work by Len Nichols and Sarah Axeen of the New America Foundation demonstrating the burden of health care costs on employers and their effects on the global competitiveness of American firms. We've seen that the current system is unsustainable—both for our employers and our nation. Today, we'd like to focus on some of the possible solutions presented in their paper and elsewhere.

The paper outlines one possible option of "cashing out" the employer contribution to health care and converting their premium payments into wages. The details of this transition would have to be carefully managed and accompanied with significant insurance market reforms (such as guaranteed issue and community rating) that would protect consumers and keep coverage affordable. They are outlined more clearly in the New America Foundation's A Sustainable Health System for All Americans.

In the Senate, S.334 the Healthy Americans Act, a bipartisan bill with seven Democratic and seven Republican co-sponsors, features a cash out that would remove the current tax preference for employer sponsored health insurance and require firms to convert previous health benefits into wages. Doing so would add about $167 billion in foregone revenue to the budget, which could be used to finance progressive subsidies for health insurance (the current tax preference is actually regressive, providing an average tax benefit of $2,780 for a family with income of $100,000 or more, compared to $102 for a family with income of less than $10,000).

A more gradual transition, again paired with insurance market reforms, might also be obtained by capping the employer tax exclusion for contributions and allowing employers that wished to continue offering insurance to do so. Those that dropped coverage would be required to convert premiums into wages.

Additionally the ERISA Industry Committee—a group representing the benefits plans of America's major employers—has developed an interesting proposal to lighten the employer burden and increase portability of coverage through a mechanism of shared funding between individuals and employers. (Read the full report here and the executive summary here.)

All these proposals share a common goal of moving away from our current system of employer-based healthcare to a more sustainable, citizen-based system of care. While such reforms are crucial and necessary to the health of Americans and our economy, they must take place within a comprehensive approach to reform that addresses the issues of cost, coverage, and quality.