After months of debate, much of it with Republican Gov. Mitt Romney, the heavily Democratic legislature adopted a bill that rivals Maine's expanded health care plan passed in 2003.
A significant force behind the plan was Romney's insistence on an "individual mandate" requiring all Massachusetts residents to obtain a health insurance plan through their employers by July 1, 2007 or purchase one on their own.
The plan also includes an employer mandate that will fine businesses that do not offer insurance of $295 per employee annually.
Massachusetts has an estimated 500,000 uninsured residents.
State budget officials estimate that implementing the plan will cost about $316 million the first year and more than $1 billion by the third year, according to the Associated Press.
For uninsured residents who live below the federal poverty line -- about $9,500 annual income -- the state will offer subsidized policies with no premiums or deductibles. Residents earning more than that, but less than three times the federal poverty line, will be able to buy subsidized policies also without deductibles, but with premiums.
Under the new plan, all Massachusetts residents will have to indicate their health insurance plans on their state income tax returns in 2008. Those who do not have a plan will be fined anywhere from $150 to $1,200 a year.
Romney compared the proposal to the state's requirement that all drivers carry automobile insurance.
"We insist that everybody who drives a car has insurance. And cars are a lot less expensive than people," Romney told the Washington Post.
The governor is expected to sign the bill into law after making changes not affecting the legislation's main purpose, according to his spokesman.