Asbestos liability is a real crisis that demands reform, but the U.S. Senate is poised for another big push for a deeply flawed bill that could actually make things worse. The bill fell just one vote short of the 60 votes needed for passage in February and is likely to spark a difficult floor fight if it is brought up again.

Asbestos claims are skyrocketing, to more than 600,000, and scores of companies have been put out of business. Some experts predict that the total number of claims could reach 3 million, and cost as much as $275 billion. The uncertainty created by all of this litigation is a substantial drag on financial markets and economic growth.

Unfortunately, the approach to asbestos reform being pursued in the Senate bill, sponsored by Senator Specter, a Republican of Pennsylvania, and Senator Leahy, a Democrat of Vermont, could actually make things worse. The bill would create a $140 billion Asbestos Trust Fund that would be funded by insurance companies and manufacturers and would be administered by the government.

There are basic problems with the trust fund. The funding mechanism is inherently unfair. The government mandates contributions from companies that may or may not have future liability, to pay for claims that may or may not be against them. This is without regard to whether they have already purchased insurance policies to limit their liability, a potential violation of the U.S. Constitution’s takings clause. Company contributions are tiered and subtiered, based in part on factors wholly unrelated to liability exposure. This creates winners and losers and unfairly forces some companies to pay more than their fair share.

Bureaucracy and politics make cost controls impossible for a trust fund. Special interests, including unions and trial lawyers, will lobby for loosened standards and increased awards. In government benefit programs, costs tend to be far higher than anticipated, making any stated funding level only a floor for future increases.The absence of effective cost controls would inevitably lead to either tax increases or the failure of the fund.

If the fund fails, Specter-Leahy includes a sunset provision that would let lawyers go back to court. This undermines the finality advantage of the trust fund approach, and creates the possibility of industry paying $140 billion now, and still facing hundreds of thousands of lawsuits at some point in the future.

Asbestos litigation is a serious and urgent problem that demands Congressional action, but the rush to “do something” should not be allowed to produce bad policy. Fortunately, there is a better approach, embodied in legislation sponsored by Rep. Chris Cannon, a Republican of Utah, and cosponsored by dozens of House conservatives.

The Asbestos Compensation Fairness Act, H.R. 1957, is modeled on successful efforts in states like Ohio and Georgia. It would use specific medical criteria from the American Medical Association to define what asbestos-related injuries are, and bar claims from plaintiffs who are unimpaired. The bottom line is that a person would have to actually be sick to sue for asbestos.

This approach, which Senator Cornyn, a Republican of Texas, offered as an amendment last time the Senate debated asbestos, would clear 90% of the asbestos cases from the dockets, allowing those with legitimate claims access to the courts while dramatically reducing liability costs for defendants. Not only is this approach favored by the insurance industry and many manufacturers, but it is also the preferred solution of the truly sick, including those with mesothelioma, who are often clogged out of the courts now and fear they would be shortchanged by a trust fund open to millions of people who are not sick.

Many of the backers of the flawed trust fund legislation are supporting it out of desperation to see something done. They would be better served by helping to build support for a better solution.

Mr. Kerpen is a policy analyst in Washington.