The Post's July 26 editorial "Where Next on Health Care?" neatly summarizes the sorry status of U.S. health care: it costs too much, serves too few and the administration refuses to take the issue seriously. Then, apparently because of resignation over this pathetic state of affairs, the editorial resurrects the idea of treating employer-paid health insurance premiums as taxable income and using the subsequent increased tax revenues to finance services for those now uninsured. The editorial asks, "Would that be a partial answer to the problem?"

No, it would not. The combined contributions for a family plan made by employers and employees where I work exceeds $600 monthly. In addition, there are spend downs, co-payments and deductibles, which can easily add several thousand more dollars. The editorial's suggestion would add nearly $1,000 yearly to our family's already ridiculously high insurance costs. Looked at nationally, transferring the $30 billion in question from an increasingly hard-pressed and angry middle-class would only erode the little political support that exists for helping the working poor. If, as the editorial suggests, more money is needed for health care -- an assumption with which I disagree -- the only fair way to get it is through a progressive income tax. But the real problem is not the absence of money. It is the way hundreds of billions are squander on the world's most bloated and least efficient health-delivery and health-financing system.

The other Western democracies spend a lower percentage of their gross domestic product on health care than does the United States, which spends more than $600 billion annually on health care -- about the same as defense and Social Security spending combined. For this spending we have not achieved better longevity and infant mortality rates -- arguably the most telling indicator of a nation's health -- than these countries.

Canada and Western Europe already have proven that quality health care is affordable. The fundamental difference is the wild profiteering and excess capacity of the U.S. system. We are over-bedded in our hospitals. Our over-reliance on nursing home care is ludicrous in view of less costly home-based alternatives preferred by the elderly. Average physician income in the United States is six times the average income for the nation; in Europe it is three times. The private health insurance industry is a completely unnecessary add-on, which serves only to confuse the public and inflate costs. The more than $60 billion savings to be realized from eliminating the eligibility determination process provided by the private insurance industry would be more than enough to provide health care to all those now uninsured.

These conditions are permitted to exist because of bitter opposition by powerful and self-serving economic interests and their allies in Congress and the White House to a planned, integrated and simply administered system that relies largely on preventive measures and community-based care -- known elsewhere as national health insurance.

Our system is morally bankrupt. It soon will be financially bankrupt. The only comfort is that with luck such a turn will prompt the public anger that is politically necessary for serious change to occur. MICHAEL PETIT Washington