There is no reason why, in a society which has reached the general level of wealth ours has, the first kind of security should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.
What Hayek had in mind was a competitive market in risk-rated insurance and a competitive market in medical services. No price controls. Let the markets rip. Mandate a certain minimum level of insurance coverage. If you’re uninsurable or can’t afford a policy, then the state pitches in.
Our political debates would be better if we were trying to figure out how to get the best out of both markets and the government rather than being trapped in the never-ending food fight between an uncompromising anti-government right and anti-market left. Hayek offers us a good base to work from.