After years of federal false starts and spotty local efforts, Massachusetts became the first state in the nation to require health insurance for every resident in April 2006.

Similar in design to the state's mandatory auto insurance policy, the plan, signed into law by Republican governor and presidential candidate Mitt Romney, requires uninsured Massachusetts residents to purchase health insurance by July 1, 2007, or face a financial penalty. The state, in turn, will provide subsidized insurance plans for residents with incomes below 300 percent of the federal poverty level.

Hailed as a legislative milestone, the Massachusetts plan appeared to strike the perfect political compromise: pleasing fiscal conservatives and liberals alike by keeping the system private and cost-effective but also promising to make quality health care affordable for all.

In the months since the bill's passage, however, critics have begun to question whether the plan is financially or logistically feasible.

Footing the bill
The Massachusetts plan hinges on the Commonwealth Health Insurance Connector, a newly created agency responsible for providing subsidized health insurance for residents who could not otherwise afford the now-mandatory coverage.

Eager to avoid large increases in government spending, lawmakers are looking to a variety of sources to help finance the agency. The new law requires small businesses with more than 10 employees and no existing health care plans to pay a per-worker "fair share contribution" to the state. Policy-makers hope that these employer fees, combined with tax incentives, federal waiver funds and increased bargaining power with private insurers, will help to defray the costs.

The vast majority of the money for the subsidy, though, will originate from massive savings predicted to come out of the state's Uncompensated Care Pool, a fund that previously reimbursed hospitals for emergency care provided to the state's uninsured.

It is a delicate financial balance, and some have worried the plan suffers from a fundamental Catch-22: low-income residents will be insured with diverted dollars from eliminating the uncompensated care pool, but the uncompensated care pool won't be eliminated until low-income residents are all insured.

And according to Dr. Alan Sager of Boston University's School of Public Health, there simply won't be enough money in the pot.

"There's too little new money to pay for the extraordinarily high cost of Massachusetts health care," he said.

"Public, employer, and retargeted pool dollars are not adequate to subsidize insurance costs down to affordable levels for people between 200 percent and 300 percent of poverty," he noted. "The law doesn't even try to help people over 300 percent."

Furthermore, Sager points to the state's large population of undocumented workers, who could potentially still require uncompensated care from hospitals in the commonwealth and therefore money from the Uncompensated Care Pool.

"There's no contingency plan," he said. "Look for the state to pick up the tab."

But government officials remain optimistic they are building a workable plan.

Amy Lischko, commissioner of Massachusetts' Division of Health Care Finance and Policy, said she believes early predictions about inadequacies in program funding are overblown.

"We absolutely considered [these kinds of concerns] in our projections," Lischko said. While she noted that precise numbers regarding the uncompensated care pool are "difficult to project," she said the initiative is well-conceived and that government officials remain committed to making it work.

Nonetheless, Lischko acknowledged that the program may be a challenge to implement.

"I am hopeful but cautious, as there are tough decisions that have yet to be made," she said. "We've done the easy stuff so far, and that's been pretty hard. The really tough stuff is still to come."

Preparing for the changes
But the final success of failure of the Massachusetts plan won't happen in the state bureaucracy or public health schools, but instead at the local hospitals and doctors' offices. At the large-scale community hospital for Massachusetts' south shore region, Quincy Medical Center has spent much of the past year preparing to transition to the new state plan. Vice President of Strategic Planning and Business Rey Spadoni said he is hopeful about the program but shares some of Sager's concerns.

"From where I sit, which is 10 miles away from the state house but a million miles away from those policy and political discussions, I'm not certain whether there is enough money in the system to fund all of this," he said.

Published stories about the rising operational and marketing costs for the Connector also have him worried that some planners "may have underestimated the complexity of undertaking a change this big."

But the state is making headway in other areas that have worried Spadoni and other hospital administrators. The government has undertaken a massive educational effort to increase public awareness of the coming change.

"[In February], our sense was that most of the eligible population who came into our hospital still did not appreciate the full extent of the mandated changes," he recalled. "That does seem to be changing and I think we're headed in the right direction."

Administrators at the Connector Agency also said they've seen progress in implementing the initiative.

"In a short period of time, over 50,000 [residents] have enrolled [in the program]," spokesman Dick Powers said.

"In addition, the Medicaid rolls have increased by 50,000 during the past six months, which means that more than 100,000 of the 372,000 who were uninsured in Massachusetts now have coverage."

Spadoni said he was cautiously optimistic but still wondered whether "short-term pressures on the system might make us all suddenly forget the longer-term problem we were trying to fix."

"I hope that doesn't happen," he said.

With the July 1 deadline drawing ever closer, Massachusetts lawmakers and residents alike will soon find out.

-- By John Harlow, Online NewsHour