This story is in the new June issue of Money

If you’re running for President, here are three numbers you have to know: The average January low in Iowa is 9°F. It takes 270 votes to win the Electoral College. And 45 million people in the U.S. have no health insurance.

That last figure has become the leading index for economic anxiety in America. It has persisted despite razor-thin unemployment and solid economic growth. And it understates the problem. More than 80 million people lost coverage for a time during a recent two-year period, says Families USA. And millions more know it could happen to them–and not, they hope, at the same time that they happen to get sick or fall off a ladder.

The U.S. spends about 16% of GDP on health care, far more than other rich countries, but we’re the only one where leaving or losing a job can trigger a medical crisis as well as a financial one. That wasn’t so terrifying back when most of us expected to work for the same employer for decades. It makes less sense in a free-agent nation.

Health-care reform has pretty much been off the table since 1994, when Bill Clinton’s push for universal coverage was squashed. But that’s changing. A recent CBS News/New York Times poll found that two-thirds of Americans think the government should guarantee access to insurance. For Democratic primary voters, health care is the big issue after Iraq. And it’s not just Democrats. President George W. Bush has proposed changes in the way the tax code subsidizes care. One of his would-be successors, former Massachusetts governor Mitt Romney, signed off on a law designed to ensure near-universal insurance in his state.

So the health-care debate is back, and this time it’s not going away. Whatever the end result, it’s going to have a big effect on your family. You may have to pay higher taxes. Or give up insurance you like for a plan with fewer choices, longer waits for elective treatments or heftier out-of-pocket payments. You may have to become a savvy shopper for your own health plan, instead of relying on your employer. But the potential rewards are big too. You could stop wondering how you’d pay your family’s medical costs if you were laid off. You could think about taking that exciting job at the start-up with no health plan. You might even come out ahead financially, if reform can bring our rapidly rising health spending under control.

As the presidential aspirants unveil their plans and the special- interest groups roll out their attacks in the coming months, expect to hear about those old demons “socialized medicine” and “greedy insurers.” The real debate is more subtle, thank goodness, and comes down to three big ideas that are taking hold in proposals from across the ideological spectrum: making insurance mandatory, changing the tax code, and mixing public and private coverage. None of these ideas is flawless. But they could be the building blocks of “everybody’s secondbest alternative,” as Jon Kingsdale, director of the new system in Massachusetts, describes the reform there.

BIG IDEA NO. 1 Insurance isn’t a right. It’s a responsibility.

In most states, everybody who drives has to have auto insurance–you must be able to pay your fair share when there’s an accident. By the same logic, perhaps everyone who will ever use the health-care system (that is, all of us) should be obliged to have insurance to pay for it–a so-called “individual mandate.” Democrats including presidential candidate John Edwards and Senator Ron Wyden have proposals that make insurance almost unavoidable. Gov. Arnold Schwarzenegger’s reform plan for California would enforce the mandate through the tax system. In Massachusetts, it’s already the law: Sign up or pay a fine.

It’s certainly one way to get closer to universal coverage. But why the punitive approach? Should the government really care if some decide, for whatever reason, to opt out? The answer comes down to cost control. The uninsured still get care when they show up hurt or sick at the hospital, and someone ultimately has to pay for that. Government–that is, taxpayers– stumps up some of the cash. But hospitals also offset the cost of free care by charging more to those who do pay. A paper by the New America Foundation calculates that in California, where 20% of residents are uninsured, unreimbursed costs add about 10% to plan premiums.

It doesn’t help that the uninsured tend to get the least cost-effective kinds of medicine. They get less preventive care and crowd the doors to emergency rooms. “People come into the hospital who have never been to a primary doctor,” says Celia Wcislo, a labor-union representative on the board implementing the Massachusetts reform. “Now they have cancer and the state pays for their care.”

Forcing people to buy insurance also helps address a problem called adverse selection. People who opt out of buying insurance tend to be younger and healthier, while those who most want to buy are often older and sicker. That makes insurance riskier to provide, which means higher premiums. Rope in everybody, and you can charge less. Finally, the mandate performs a neat political trick: It allows Republicans like Schwarzenegger and Romney to speak of health insurance as a “personal responsibility” even as they expand government’s role in it.

THE MESSY DETAILS: The personal-responsibility pitch goes only so far. The majority of the uninsured aren’t trying to free-ride–they plain can’t afford insurance. If you require them to buy it, you have to help them. In Massachusetts the state has set up the Connector, a program to make it easier and cheaper for individuals and small businesses to find coverage. But it is also providing subsidies. So whatever Massachusetts may be saving in hospital and adverse-selection costs, the mandate costs money–it just gives the state more bang for its buck by insuring more people. If a mandate plan was tried at a national level, it might cost north of $100 billion a year, says economist Jonathan Gruber, another member of the Massachusetts board.

And mandates are politically hard to pull off. Compared with the rest of the country, Massachusetts has it easy, with 10% of its population uninsured in 2005. (Nationally, it’s 15%.) Even so, the mandate is part of a law years in the making, which required concessions from both Romney and a Democratic legislature. And there’s still a lot of push and pull over how the law will work. The Greater Boston Interfaith Organization, one of the groups that fought for reform, wanted to limit the mandate. It ran workshops where people drew up household budgets, and used the results to question whether many could afford insurance, especially considering that cheaper Connector plans would require significant out-of-pocket costs. “Lowand moderate-income people in the Boston area are at the breaking point,” says Richard Moore of the GBIO.

In April the Connector board drafted a compromise that exempts some from the mandate. The challenge now: signing up those who won’t get subsidies. If many decide the new Connector plans are too expensive or don’t offer enough coverage, the mandate won’t amount to much more than a harsh new Bay State tax.

BIG IDEA NO. 2 The road to reform runs through Form 1040

Even now we don’t have a free-market health system. It’s not just that we have Medicare for the old and Medicaid for the poor. If you have insurance through your employer, the government is subsidizing you. Uncle Sam gives up about $200 billion a year in taxes by exempting the premiums employers pay, as well as some employee contributions. If you have to buy insurance on your own, you don’t get that subsidy. President Bush wants to change that by replacing the current tax exemption with a standard deduction for anyone with a health plan: $7,500 for individuals, $15,000 for families. Some people with more expensive plans would pay higher taxes. But at a stroke, this could make it easier for millions to buy insurance on their own. For example, a single person earning $50,000 would get a $3,000 tax break to help buy a policy, according to the Tax Foundation.

This is one time when Bush has actually gotten liberals to perk up and listen. After all, as the chart above shows, much of today’s tax benefit for insurance goes to the affluent. And health policy wonks of all political stripes think this big preference for employer-based coverage is outdated. “The country sort of slid into it by accident,” says Wyden, the Senate Democrat, who notes that companies turned to health benefits as a way around World War II-era wage controls. Wyden’s plan, like some other universal- care proposals, would be financed in part by redirecting the subsidy. Taxes are also an important part of the new Massachusetts system, because it allows more people to buy coverage with pretax dollars. This could mean the difference between a monthly premium of $175 and one of $109 for a single man.

But there’s a lot more going on in Bush’s proposal than tax fairness. Conservatives want to shift people out of employer plans and into policies they choose and pay for themselves. For one thing, such policies would be portable. “What gives stability to a system is if people have a long-term relationship with an insurer, even if they change jobs,” says John Goodman of the free-market National Center for Policy Analysis.

Bush is also trying to use market forces to tamp down costs. Since his deduction would be a fixed amount, you’d have no tax incentive to buy a policy that cost more, and if you bought one that charged less you’d still get the break. That’s a natural complement to Bush’s other big health-care tax initiative, the Health Savings Accounts that made their debut in 2003. These allow anyone in a highdeductible health plan to save tax-free for future medical expenses. Put simply: Bush wants more people to buy plans with skimpier benefits. The hope is that if you paid for more of your care, you’d be tougher than any HMO about keeping expenses down.

THE MESSY DETAILS: Problem is, if you merely pull the loose thread of the tax code, you just might unravel the whole employer-based system before a new one replaces it. That’s because the deduction could encourage some employers to stop offering health insurance. But individual plans can’t offer the low premiums that risk pooling affords employee plans. People with chronic diseases are often shut out altogether. Sure, that might change as tax incentives spurred the individual market to grow, and Bush wants to use federal money to encourage states to help people get coverage. But economist Jason Furman, a former adviser to Bill Clinton and John Kerry, says the President’s plan is too sketchy. “It’s taking too big a chance to just assume that this thing will somehow get fixed,” he says.

Advocates of universal health care are even less enthusiastic about HSAs, which look to them like a tax shelter for the affluent. Those high-deductible plans, they say, may not do much to discourage excessive health spending for those who can easily pay, say, a $4,000 deductible. Yet the same deductible may keep others from buying the care they need. “It forces poor people to take risks,” says Arnold Relman, former editor of the New England Journal of Medicine.

BIG IDEA NO. 3 Create the not-exactly-national health plan

The employer-based system is crumbling, but many Americans are wary of a Canada-like system. And 1,300 health insurance companies certainly won’t like being told to find something else to do. “If you say you are going to eliminate them, you’ve declared war on them,” says Ezekiel Emanuel, a bioethicist at the National Institutes of Health. Many reformists instead propose a mixed system. The government would guarantee you access to coverage regardless of where you work, but insurers would stay in business.

The Massachusetts and California plans attempt something like this. At a national level, hybrid reform comes in two basic flavors. The first would sever the link between your employer and your coverage, and have you choose a (highly regulated) private insurer. Emanuel and Stanford economist Victor Fuchs propose doing this with a voucher funded by a new tax. Wyden would tell employers to drop insurance–and to give you a raise–and then create an individual mandate with subsidies.

The second approach is “pay-or-play.” Employers could offer insurance, but there would also be a public health system, financed by contributions from employers who didn’t offer plans. That’s the John Edwards plan, which is similar to one designed by Yale’s Jacob Hacker under which about half of working-age Americans would join an expanded Medicare program.

The different tacks come down largely to a question of how best to rein in costs. Emanuel thinks private insurers will have the financial incentive to better organize how doctors and hospitals deliver care, which will be especially important as the population ages and more of us face chronic disease. On the other hand, a public system would have the brute power to push down costs and wouldn’t waste a lot of money on frippery. About 14% of the money private insurers collect doesn’t go to health care at all but to administration and profits.

THE MESSY DETAILS: We’ve been here before–the Clintons tried to mix private insurers with public money too. On the next try a hybrid reform has to get a lot of details right. And not just on paper. In a real-life legislative process, insurers will fight to limit their liability, hospitals and doctors will try to protect their incomes, employers will want to keep from paying, and the elderly and others will battle for more generous benefits. And reformers must produce a bill simple and beneficial enough for people to rally behind. That could prove tough–at least as tough as, say, Iowa in the wintertime.