The fourth and final post in our week-long overview of health care reform.

Here’s a fun question: Have you read the bills? It is often asked by those who haven’t to politicians who also haven’t.

Kidding aside, the legislation winding through Congress right now is complicated and not easily boiled down into a single blog post. But it’s important to know what the general features of the bills are, which, perhaps surprisingly, vary little from one another.

Today, we will be talking about the three major proposals: the tri-committee House bill, the Senate HELP committee bill, and Max Baucus’ Finance committee outline. (Obama’s plan is close to the House bill, but also includes some tort reforms and flexibility on the public option).

Here are the things that all of the major plans offer: no discrimination based on pre-existing conditions (insurers must cover you), guaranteed renewability (no rescission), no caps on lifetime benefits, community rating (which requires insurance companies to charge the same price for a policy to everyone in a given region), an individual mandate (everyone must purchase insurance), health insurance exchanges or “gateways,” subsidies for the poor (though these range from stingy to generous), and an expansion of Medicaid.

Baucus’ Finance Committee outline, currently being discussed by the “Gang of Six,” contains no public option; the Senate HELP bill and House bill do. Baucus’ bill instead proposes “co-ops,” non-profit collectives that would offer an alternative to for-profit health insurance policies. Although they sound appealing, they are, unfortunately, not very promising.

This co-op idea is being floated because it is unlikely that a public option will pass in the Senate. However, there has been talk of a “triggered” public option that would only come into effect if private insurers weren’t able to reach certain cost benchmarks after some amount of time. Olympia Snowe, the centrist GOP senator from Maine who is one of a small handful of Republicans who has crossed party lines to vote for Democratic legislation (e.g., stimulus bill), is a strong proponent of this concept. President Obama also briefly mentioned this as a possible compromise in his primetime speech on Wednesday.

Both the Senate and House call for another promising cost-cutting policy: comparative effectiveness review. The bills would establish an independent commission to research the efficacy of different treatment options compared with their costs. It should help to identify the best ways to treat different conditions. This research could, in the future, determine government payment policy, maximizing our health per dollar.

The HELP bill and House bill also include an employer mandate – or, as its called, a “pay or play” provision. Basically, employers would have to offer insurance to their workers or face steep penalties. (Otherwise, they could just drop health care as a benefit, forcing their employees into the exchanges). The Baucus outline offers an employer mandate as well, but it is a much weaker provision that has some serious downsides for low-income workers.

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In aggregate, this legislation leaves a lot to be desired. It mostly leaves untouched the general employer-based framework that distorts insurance markets (of course, this is because “if you like your insurance, you can keep it.” More fundamental, Wyden-Bennett style or single-payer reform would cause you to lose your employer-based insurance).

The bills also do little to deal with incentive problems (currently, our system is based on a fee-for-service framework. When a doctor orders a test, does a surgery, or has an appointment with you, he gets paid. This creates incentives for doctors to overtreate, since by doing more, they earn more. There are also perverse incentives on the insurers end, who fight for the healthiest patients and try not to cover the sick. And, on the demand side, individuals often don’t see a lot of the costs of their health-care because their employers pay for most of it. It would be beneficial if we all shared in the costs of our own coverage more. See the links at the end of the post for more on incentives.)

The bills, as they stand, also aren’t going to make a huge dent in the long-term explosion of costs, either. Even if they are budget neutral over 10 years, they don’t look as if they will reduce deficits beyond that window.

And, despite Obama’s claim that he will be the last President to try for health care reform, we will, no doubt, have to return to the table to figure out how we are going to really “bend the curve” of health care spending. (The bills do establish some very promising cost-cutting proposals that could lead to new ideas down the road).

But, ultimately, if a bill gets passed, it will be a giant step forward for health care in this country. People will no longer have to worry about losing their insurance if they get sick. Everyone will be able to purchase affordable, baseline insurance (and will probably have to under a mandate). The poor and lower-middle class will receive (generous, I hope) subsidies to help them pay for their policies. If you lose your job, you won’t lose your insurance.

It would be the biggest reform package passed in years and would finally offer financial security and health care coverage to every American.

Further policy reading:

Side-by-side comparison of different health care proposals

My favorite health care article of the year: Why we should pay attention to the Mayo Clinic – and why incentives matter

A demand side look at incentives and a radically different approach to reform

Two great bloggers: Ezra Klein and Jon Cohn

How to bend the cost curve

The architect of the public option makes the case for its inclusion in reform (pdf -highly rec’d)