Health Care's Political Fractures

· Advocates for every disease, and every group of group of medical specialists, who have pushed through dozens of laws in most states requiring specific treatments to be covered by every health plan;

· Liberals, who have pushed through community-rating laws that limit how much more insurers can charge to cover older, sicker employee groups than younger, healthier ones.

None of these objections, however, is insurmountable.

All insurers, for example, could be offered the option of operating under the same federal rules as the business associations, with state regulators deputized to help write and enforce them. The rules could include a trimmed-down set of mandated benefits, including basic preventive care and any treatments required by at least 50 percent of states.

Those rules could also allow some premium variation based on age, gender, geography and past health experience, but only to the degree that the highest premium could be only three or four times more expensive than the lowest-priced one.

Beyond these obvious compromises, there are a number of fresh ideas that could make the small-business insurance market more vibrant and competitive.

Katherine Swartz of Harvard's School of Public Health has proposed a plan for a federal reinsurance program that, in effect, would insure health insurers against some of the risk that they could wind up with one of the 10 percent of Americans who each year account for 70 percent of health expenditures. This would equalize premiums and reduce the incentive for insurers to "cherry-pick" the healthiest employee groups. The reinsurance could be financed through a surtax on premiums.

Michael Porter of Harvard Business School and Elizabeth Olmsted Teisberg of the University of Virginia's Darden School of Business recently proposed a simple rule that would change the way doctors and hospitals compete on the basis of price by requiring them to charge the same to every patient and insurance company, regardless of size. That would eliminate the massive cost-shifting that favors big employers and big insurance companies.

Finally, there is the newly passed Massachusetts health plan, with its requirement that all individuals purchase at least a barebones health insurance policy, with subsidies for low-income workers and modest penalties for employers who don't offer coverage. By getting everyone in the "insurance pool," Massachusetts would eliminate the hidden cross-subsidy in which taxpayers and those with health insurance subsidize the care provided to the uninsured.

These reforms won't provide a cure for cancer, obesity or lumbago. Nor will they do much to slow the rise in prices for drugs and hospital stays. But they almost surely would shrink the unacceptably large number of uninsured Americans by improving the workings of the market for individual and small-business health insurance.

If Ted Kennedy and Republican Gov. Mitt Romney can hammer out a deal for Massachusetts, Ted Kennedy and George Bush could do one for the whole country. The only thing missing is the political will to get it done.

Steven Pearlstein can be reached atpearlsteins@washpost.com.