The new Massachusetts plan to achieve nearly universal health coverage represents an important bipartisan political milestone ・one that people in many other states hope will serve as a model solution for the thorny national problem of the uninsured.
But policy analysts and state officials say Massachusetts now faces an even greater challenge: creating a viable market in affordable insurance policies, so that businesses and individuals will buy the coverage mandated by the bill the state's legislature passed on Tuesday.
While state officials say they hope insurers will offer plans that cost only a couple of hundred dollars a month under the new program, no such individual policy exists in Massachusetts today.
"Conceptually, this is historic, breakthrough legislation," said Ronald F. Pollack, the executive director of Families USA, a liberal advocacy group in Washington, who said other states might view the bill as a new model. "Now we have to look at the implementation to see if, in practice, it is as significant a breakthrough."
Some experts note that even if Massachusetts can hammer out the details, the state's relatively low number of uninsured residents and strong tradition of employer-sponsored insurance may mean that a similar model may not work in many other states.
The bill's success, say policy analysts, depends very much on whether lawmakers can figure out how to make health insurance affordable at a time of relentless increases in the cost of care.
In Massachusetts, individuals must now pay about $600 a month for a plan that covers a single person and $1,000 or more for a family, making the current plans unattractive or unaffordable to many residents of the state, where only about 50,000 are now covered under individual policies.
"You can't have an individual requirement under today's paradigm," said Timothy R. Murphy, the state's secretary of health and human services, who described the current system as providing few choices for individuals, especially those who are young and healthy, yet who must pay high premiums.
State officials say they believe individuals will be able to pay a bit more than $200 a month, or $2,400 a year, under the new program. The legislation, which is expected to be signed into law by Gov. Mitt Romney, a Republican seen as a likely presidential candidate in 2008, represents a novel compromise on an issue that has been a political hot button throughout the country.
The plan aims to make both individuals and corporations more responsible for covering the state's citizens. Companies that do not offer insurance to their employees will be required to pay a $295-a-year fee for each worker, and individuals will face tax penalties if they choose not to buy insurance.
The rationale for forcing even healthy young people to have coverage is that their participation in the insurance pool lowers premiums for everyone ・while keeping medical calamities among uninsured young people from creating a financial burden on the health care system, which ends up raising everyone's rates.
The goal is to expand coverage to an additional 515,000 of the state's 6.4 million residents during the next three years without forcing the state to foot the bill by itself.
Lawmakers estimate the new program will require only $125 million in additional state funds. But if the cost of coverage does not come down significantly, the state could be in a position of having to subsidize the policies heavily to keep them affordable, and many people may still opt to go without coverage.
Individuals, who must certify on their state tax returns that they have insurance, will face a penalty of only $150 during the first year if they do not buy coverage. The penalty for future years will be half of the annual premium they should have paid.
"If the penalty isn't equal to the coverage cost, you're going to have some people making a rational decision not to buy coverage," said William S. Custer, a health administration professor at Georgia State University.
State officials say they are confident that they can bring down the cost of insurance by adding to the number of people in the insurance pools and by allowing insurers to offer less expensive plans with less extensive coverage. The legislation also calls for combining the markets for small businesses and individuals, which state lawmakers estimate will lower the cost of individual policies by nearly one-quarter.
Mr. Murphy said the state would also consider increasing the penalties if too many people who could afford coverage were refusing to pay for insurance.
"This is a novel approach," he said. "Therefore, we will learn from what we do."
Just how much coverage should be required is one of the main details left undecided, although lawmakers have agreed not to require insurers to offer new benefits until at least 2008. Now, the minimum requirements for a health insurance plan sold in Massachusetts include such basics as treatment for diabetes, and even mental health care, but do not require covering visits to chiropractors, for example.
Insurers have long argued that a major reason the plans they offer are so expensive is that state regulations require them to offer a wide array of high-cost benefits in an attempt to make sure people have adequate insurance.
"Our members are very anxious to provide affordable coverage," said Karen Ignagni, the chief executive of America's Health Insurance Plans, a Washington trade group. She said lawmakers had to balance the need to protect individuals with the need to give insurers flexibility in the plans so that people could choose less expensive options.
"That's a conversation that's proven to be an extremely difficult conversation, state by state and in Washington," Ms. Ignagni said.
Mr. Murphy said that the legislation called only for an undefined minimum level of coverage and that the state should allow individuals to decide what level of benefits they believed they needed.
The legislature has also not decided what constitutes affordable coverage. And some advocates are concerned that without generous subsidies, too many low-income workers will still not be able to pay for insurance. "Individual mandates only make sense if coverage is truly affordable," Mr. Pollack said.
Even if Massachusetts succeeds in solving its own problem with the uninsured, other states with a much higher proportion of people without insurance may not be able to afford expanded coverage.
And some policy analysts say that mandates, whether aimed at companies or individuals, simply do not work. "Not everybody has auto insurance; not everybody pays their state income taxes," said Michael D. Tanner, the director of health and welfare studies at the Cato Institute, a policy research organization in Washington that opposes the Massachusetts legislation because of what it views as too much government intervention.
But policy analysts and others say Massachusetts has taken an important first step, even if the journey proves difficult. "They have the political will," said Carolyn A. Watts, a health services professor at the University of Washington. "In a sense, they did the easy part."