In Massachusetts, test for a pioneering health plan

Its new insurance mandate kicks in July 1. Some see a model for the rest of the US.

One of the most ambitious healthcare initiatives by a US state is entering a make-or-break implementation phase – just in time to become a model of success or failure for presidential candidates.

Starting next week, on July 1, most residents of Massachusetts will be required to carry health insurance, even if their employer doesn't provide it and even if they aren't eligible for a government-subsidized plan.

Already the Massachusetts experiment offers at least two lessons: First, a major healthcare overhaul is possible, despite all the competing interest groups. Second, a big change doesn't mean a quick fix. The state has already scaled back its early hopes that all residents would be covered.

The implementation here comes as pressure mounts on politicians nationwide to restrain rising medical bills and extend health insurance to the roughly 15 percent of Americans who lack it. Polls suggest that most Americans view the current healthcare system as broken. Federal and state budgets are strained by medical inflation. Increasingly, businesses also see a crisis – one that affects their ability to compete in world markets.

For the nation, the tough choice ahead is to define the solution. Does it involve putting more responsibility with government, with individuals, with employers, or some blend of these? What's being tested in Massachusetts is a hybrid approach, but one that puts substantial obligations and choices with individuals.

The Bay State plan has skeptics and detractors on both left and right. Supporters say that fact hints at the plan's balance – and at why it might succeed.

The plan represents a compromise of ideas proposed by Republican Gov. Mitt Romney, now out of office and running for president, and Democratic lawmakers.

"It's coming right down the middle," says Jonathan Gruber, a professor at the Massachusetts Institute of Technology who helped shape the Massachusetts plan. "It's sort of an American approach to universal coverage."

Canada and many European nations cover all their citizens through systems in which the government alone pays for healthcare. Whatever path America takes, a central challenge is how to balance the goals of coverage and cost control. Americans can only be covered if they can pay for it, whether that payment is individual or collective.

The Massachusetts plan outlines a base level of required coverage and encourages competition among insurance providers. A new state-created marketplace, called the Commonwealth Connector, provides the forum for individuals and families to compare health plans online just as they would airline tickets. Gold, silver, and bronze labels give clues about the scope of coverage. The prices also vary by age and occupation. One "bronze" plan, for example, would cost $370 a month for a 50-year-old Bostonian who works in retailing.

"This plan will insure the uninsured. That's very laudable," says Regina Herzlinger of Harvard University in Cambridge, Mass. But she'd like to see consumers empowered with more insurance products in the "supermarket," and more information about their effectiveness.

"I now know more about that raisin bran than I do about the guy who's going to do [an operation]," says Ms. Herzlinger, the author of a new book on healthcare.

Another criticism is that the financial penalties – imposed next year on residents who don't buy coverage – are so small that many people won't buy.

Madeline Ortiz is currently trying to find employment that includes healthcare coverage, something she doesn't have now. She received a letter in the mail about the new state requirement, but says, "I haven't even bothered with it yet. I'm not sure what my options are."

So far, Massachusetts is the first and only state to introduce an "individual mandate" to buy insurance. But the idea may be gaining credence among other states and interest groups. The Coalition to Advance Healthcare Reform, a new advocacy group formed by large employers and health insurers, includes an individual mandate among its core proposals.

The Massachusetts plan may also be setting a standard for presidential candidates. When Democrat Barack Obama recently proposed a package of healthcare reforms, the mixed response from pundits included this refrain: His plans lack any mandate to achieve universal coverage. "That was a pretty telling sign," says Mr. Gruber, a professor at the Massachusetts Institute of Technology. "He put out a plan that a year ago would have been beyond what anybody had proposed," yet was criticized for not going far enough.

That response could reflect how mind-sets have shifted since the Massachusetts law's passage in 2006. At the very least, the law has helped prod other states, from California to Pennsylvania, to consider sweeping changes. But beyond this state, national consternation about healthcare has also been deepening as costs continue to spiral and as many employers pare back on health benefits.

Some reform proposals involve coaxing employers to do more. The Massachusetts plan calls for businesses with more than 10 workers to offer insurance or pay a fee to the state. But in states such as Hawaii, such mandates have failed in court, because federal law shields employers from facing differing rules in states where they operate.

Lawrence Mohammed, who recently opened a jewelry repair shop in Boston, says the law will probably prevent him from taking on employees. He says, "[The law] is scary, but I know it has to be done."

Polls indicate that this is a common sentiment.

In a Gallup survey last fall, 7 in 10 Americans ranked the US healthcare system as either having "major problems" or in an outright crisis. A two-thirds majority said it's up to the federal government to make sure all Americans have coverage. At the same time, a slim majority said the current system of private insurance should be maintained, rather than replaced by a government-run system.

Similarly, some other national polls have found the public to be narrowly supportive of a Massachusetts-style requirement on individuals.

"Our goal is [to cover] 85 percent of the uninsured," says Gruber. That goal would mean coverage for nearly 99 percent of the state's overall population.

•Nicole Hill contributed to this report.