The shared starting point for Congress’ and President Obama’s efforts to reform the nation’s health insurance system is that the current system is not financially sustainable.

There is a consensus that neither the federal budget nor the national economy can afford the relentless escalation in both health care costs and the added costs of private insurance to manage the risks and administer the payments and accounting systems.

As care and insurance costs rise, fewer businesses will be willing to provide employer-based insurance, fewer individuals will be able to afford private insurance, and the federal government will become unable to sustain the yearly increases in the cost of federally sponsored care or insurance. So fewer Americans would be covered at work, and the numbers of uninsured, underinsured, and fraudulently insured would continue to grow.

So the question we have to ask is whether the "reform" bills solve this downward spiral?

Looking at the emerging Senate bills, it is hard to see how the underlying conditions driving this imminent crisis would be alterered in any fundamental way. Assuming the best of the combined Senate bills emerges, it would accomplish the following:

– The federal government would endeavor to reduce the number of uninsured by about 40-45 million people, with the hope that about 97 percent of Americans would be "covered" through one or another mechanism. It would accomplish this by requiring most individuals to purchase insurance or pay a penalty.

– It would cover some of the lower-income uninsured by expanding eligibility for Medicaid, and . . .

– It would cover some of the rest by subsidizing the insurance premiums of millions more low and moderate income residents. These folks would purchase their insurance from state-administered exchanges ("Gateways") overseen by the federal government.

The money to pay for this new coverage would come from these major sources:

(1) About $600 billion or so (over the next ten years) would be recycled by reducing current payments to Medicare/Medicaid providers — doctors and hospitals — and giving some of it back to them for caring for more people in Medicaid. The claim is that this massive reallocation would not adversely affect the quality of care for those enrolled.

(2) Another $600 billion or so from new federal revenues, which would be cycled mostly through the private insurance industry via subsidies of insurance premiums.

(3) Some of those billions would come from contributions by employers who, under "play or pay," would be required to contribute $750 per full-time employee and $375 per part-time employer if they did not provide health insurance plans at work.

(4) Further billions would be collected from one or more new taxes, such as reduced deductions for wealthier individuals and/or capping the exclusion of health benefits to individuals.

These estimates are very rough, but it doesn’t matter; the point is to look at the structure of what’s going on. In the end, the insurance industry would gain tens of millions of new customers who would be required to purchase insurance. Many of them would have their insurance premiums subsidized by federal revenues. The insurance industry would essentially get about $1 trillion dollars or so in new business, backed by the federal treasury. The amount rivals that given to bail out the banking industry.

Meanwhile, doctors/nurses and hospitals working for Medicare/Medicaid would be paid less per person, but be asked to care for more people in Medicaid.

Notice what’s missing?

There’s no real cost reduction for the biggest part of the system. There don’t appear to be any mechanisms to actually lower the costs of providing health care, nor any real pressure on the insurance industry to become less bloated, more efficient.

To be sure, there’s this "strong public health plan option" boldly announced by the HELP Committee, but how much impact would it have? Despite claims that consumers deserve a choice and the industry needs to be kept honest, the bill deliberately and severely limits the people who are allowed to choose the public option.

About the only individuals who can choose the public option are people who don’t have insurance through work, or who’s options through work are deemed "not affordable" (more than 12.5 percent of their gross income). And there are other limits on the public plan designed to ensure that it does not out-compete even the private plans available in the exchange.

Severely limiting access to the public option was deliberate. The Committee knew that if more people were eligible, then more would need subsidies to pay the premiums, and that would drive up federal costs and the CBO "score." In the insane D.C. world, a good CBO score is imperative; the overall effect on the economy appears to be secondary.

So while there could be a public plan that some people could choose, the vast majority of people would not be allowed to choose it — unless rising insurance premiums induced their employers to drop coverage at work, forcing their employees to go to the exchange ("Gateways") to select insurance there, and the public plan were the preferred choice.

In other words, while the HELP bill requires states to construct "Gateways," they aren’t really "gateways" to facilitate entry or access to the public option. Instead, the structure deliberately bifurcates the market to shield the employer-based private insurance system from competition; the gateways are designed to be walls to keep people out until their employers leave them uninsured.

A possible scenario:

1. Given this structure, there will be some payment reallocations forced by the feds in Medicare/Medicaid, but it’s unclear how sustainable that will be if real cost reductions don’t occur.

2. With essentially no competitive pressure on private insurers that supposedly "cover" 160 million Americans, insurers will do little to control their costs/profits or force cost discipline on their affiliated health care providers.

3. Both health care and insurance costs will continue to escalate rapidly, leaving the fundamental problems unsolved.

4. With rising insurance costs, and neither government nor individuals able to keep pace, millions will return to an uninsured/underinsured status.

In short, the reform structure so far includes a set of massive transfer payments from patients, tax payers, and some providers in the federal system to insurers and providers in the private system. There’s no assurance that the underlying cost structure will be brought under control. And the current system will continue to bankrupt individuals, burden businesses, and break the federal budget until the government finally says, "enough."

What’s to stop this?