When Senate Majority Leader Thomas Daschle shelved the $110 billion stimulus package Congress was considering last month, he did more than miss an opportunity to give the economy a boost. He passed up a chance to help the millions of Americans who lack health insurance.

That's because the legislation contained a provision, carefully hammered out by the president and a bipartisan coalition of congressional "centrists," to help the unemployed and uninsured. The provision called for $13 billion worth of tax credits and premium subsidies for private health insurance for the unemployed. To get them help quickly, the assistance would be delivered through state unemployment compensation offices. Families would have been eligible for a credit that amounted to 60 percent of their health-insurance costs-up to nearly $300 per month for a period of two years.

But because he strongly opposes this common-sense reform, Sen. Daschle refused to let the bill come up for a vote. He wanted the additional assistance to go only to the small percentage of the unemployed who still could take advantage of their former employers' health plan. All other displaced workers would be enrolled in Medicaid, a welfare program.

Never mind Medicaid's reputation for substandard care, its relatively poor access to doctors and specialists, and its mounting financial problems. Sen. Daschle wants no part of any health-care proposal that introduces patient choice or private-sector competition into the health-care system. Inexplicably, he wants displaced workers to remain dependent on either their former employers or welfare bureaucrats for their health-care coverage.

This insistence on the status quo reflects a broader problem with the current health-care system. By current law and regulation, employees' health-care coverage is tied to the job. How? Employees and employers get unlimited tax relief for the purchase of health insurance-but only as long as workers buy into the plans their employers provide.

Not surprisingly, those who work for large corporations usually get the best coverage. Those who work for small businesses often get no coverage at all. If they want to buy it, they can, but with no tax breaks to offset the cost. The unemployed, of course, have no coverage and get no tax relief or even limited federal assistance to get the coverage they want or need.

There's another hitch. Patients often have little or no choice. They basically must take what their employers offer. Many workers are forced into HMOs. Large employers often offer more than one option. Small employers often don't. If a plan doesn't fit the workers' needs … well, tough. They can go out and buy their own plan without any tax relief, or just make do.

For the unemployed, the situation is desperate. Not only do they lose both their coverage and their tax break, but they're forced to shell out for premiums that will climb an average of 13 percent or more this year. And even if they could afford it, the plans don't always meet the needs of a working family; they often include coverage of unnecessary items that drive up costs merely meet the requirements of state law. Nationwide, more than 1,400 state mandates govern the type of medical treatments and services health insurers must cover.

These mandates force customers to subsidize treatments and procedures that many neither need nor want, such as acupuncture, chiropractors, contraceptives, dietetic services, drug-abuse treatment, in vitro fertilization, infertility treatments, marriage therapists, social workers, professional counselors and psychologists. Maryland has 50 such mandates; California has 42.

And more are on the way. A study by the Health Insurance Association of America shows that as many as one in four uninsured Americans lacks health coverage precisely because of the climbing costs of such mandates.

Unless we're prepared to let the number of uninsured Americans rise still further, this situation can't continue unchecked. Congress should make assistance for the unemployed its first priority of the new year. It should extend generous individual tax relief-or premium subsidies for those who don't have the money-to families so they can buy the health coverage of their choice. And state lawmakers can help by repealing the often silly mandates that price health-care coverage out of reach for so many families.

We've seen too many people lose their jobs-and their health insurance as a result-since Sept. 11. Times are tough enough without Washington making them tougher. The House of Representatives has already passed relief. A question for the Senate: Why not give laid-off workers and their families a break?

Robert Moffit is director of domestic policy studies for The Heritage Foundation, a Washington-based public policy research institute.