Not everyone loves healthcare reform. But almost everyone loves babies. Talking about babies – or more specifically about how babies c ome into the world – can help us understand some of the issues that federal healthcare reform is designed to solve. This is not a matter of left or right. These issues will remain even if Michelle Bachmann becomes president and makes repeal of “Obamacare” her top priority.

For most of us, when we were born, our mother had some kind of healthcare coverage that helped pay for the cost of her stay at the hospital. Most people have health insurance through their employer or buy it as individuals. This will remain true since federal healthcare reform helps millions of Americans and hundreds of thousands of small businesses purchase private health insurance coverage.

Not all health insurance, though, includes a maternity benefit. On the one hand this makes intuitive sense. Why should young unmarried men be required to buy a health insurance policy that includes coverage for labor and delivery? After all, these men would be surprised if they ever became pregnant. Very surprised.

But without coverage for this type of essential benefit, the market for private health insurance breaks down. Insurance market works by pooling risk across a large number of people. We all pay into the system so that we can access healthcare when the things happen to us that we could reasonably expect to happen. And babies being born is one of the things that happens. All the time.

In recent years, a situation has developed in California where some individual insurance policies include a maternity benefit and others do not. It means that we’ve set up a market in which insurers are competing over how little they can cover. The less they cover, the cheaper their policies, the more business they get. That’s a terrible set of financial incentives for these businesses to have.

This is the same reason that federal healthcare reform stops insurers from denying coverage to people with pre-existing conditions. No one should want to go back to a world in which they can do that. It is inhumane … but beyond that, it’s also a market failure.

For markets to work, the financial incentives of businesses need to be directed toward producing something that is socially valuable, such as high quality consumer products. Now that health insurers will have to cover essential benefits such as maternity, they will have a new and better set of financial incentives. These incentives will encourage health insurers to finance access to high quality care healthcare that emphasizes prevention, not to reduce benefits and cover only the healthy.

In Massachusetts, where a law just like federal healthcare reform has already been in place for a few years, this theory is working in practice. Blue Cross Blue Shield of Massachusetts has developed what it calls the “Alternative Quality Contract” (AQC). Under the terms of this contract, doctors are compensated for the quality of the care they provide, not just the quantity of services they deliver. The results are in, and the AQC has both improved medical quality and helped rein in healthcare costs.

Critically, this is a private sector innovation. Many people criticized healthcare reform for not including enough cost control. But it isn’t the job of the government to control healthcare costs in the private market. It’s the job of the government to help create a set of coherent and consistent financial incentives – a “level playing field” – and then let healthy competition in the private sector do its work. Requiring insurers to cover essential benefits such as maternity is an essential part of the government’s role.

We desperately need to lose the political grandstanding around healthcare reform and continue with the urgent priority of fixing the market for private health insurance. The law passed by Congress last year was an important step in that direction but much heavy lifting remains. Regardless of what kind of healthcare coverage their mothers’ have, all new babies should be born into a world in which we have done the hard work of getting this right.