Covering the uninsured.

Byline: The Register-Guard

All eyes are now on Massachusetts as it launches an innovative effort to deliver basic health care to 95 percent of its residents within the next three years.

The Massachusetts plan is exciting because it brings together several elements that have - individually or in combination - been deal-killers in previous health care reform efforts:

A requirement that all state residents obtain health insurance, which is similar to the requirement to carry car insurance.

A requirement that businesses with more than 10 employees pay an annual fee of $295 for each uninsured employee.

Creation of a state agency to evaluate health plans based on quality and affordability.

Government subsidies to private insurance plans that will allow more low-income workers and children to obtain coverage.

The groundbreaking individual coverage mandate will be enforced through state income tax penalties that will start to kick in after July 1, 2007. Uninsured state residents who fail to obtain coverage by that date could lose their state tax exemption, which is worth about $150 per per- son.

Beginning in 2008, individuals who don't have insurance will be subject to a penalty equal to half the annual cost of a health insurance policy, an amount likely to total several thousand dollars.

Requiring individuals to carry health insurance is a key component of Massachusetts' strategy to rein in spiraling health care costs. People who can't or won't buy health insurance invariably try to save on health care expenses by forgoing preventive care.

Most of these people end up seeking care from hospital emergency rooms, which are required to treat them regardless of their ability to pay. This is horrendously expensive and inherently inflationary.

Hospitals shift the payment burden to insured patients, which forces insurance carriers to charge ever-increasing premiums. Employers who provide health insurance for their workers respond to the rate hikes by reducing or eliminating coverage. Attacking this dysfunctional cost-shifting is good public policy.

Oregon, with tens of thousands more uninsured residents than Massachusetts, doesn't lack incentives to explore a similar strategy. But Oregonians would do well to let Massachusetts "show them the money" before trying to replicate the Massachusetts plan here.

Massachusetts was able to jump-start its reform effort by tapping a state fund dedicated to compensating hospitals for free emergency room care.

Despite access to an existing pool of money, questions remain about the state's ability to pay for the sweeping health care program. The employer mandate of $295 per employee is, by most accounts, grossly insufficient.

Even so, it remains subject to Republican Gov. Mitt Romney's threatened line-item veto.

In theory, the reduction in cost shifting and the market reforms built into the law will lower insurance premiums, but experts disagree on how far prices will drop. Without a dedicated source of revenue, no one can predict what might happen to the state's ability to provide general fund subsidies to the program if a recession reduces tax revenues.

Oregonians have been through the painful experience of having a promising and innovative health care program eviscerated by funding cuts. In 2002, former Gov. John Kitzhaber's Oregon Health Plan provided coverage to 109,000 low-income Oregonians who weren't otherwise eligible for Medicaid. By 2005, state revenue shortfalls had caused the Legislature to slash OHP Standard down to 25,000 people.

The Massachusetts breakthrough is welcome news, and it shows what can be accomplished when the various stakeholders are genuinely willing to compromise. But it is an interim step.

It serves as a reminder that the U.S. health care system remains in need of a top-to-bottom overhaul. Oregonians already have a champion for that kind of revolutionary reform in John Kitzhaber. They should learn what they can from Massachusetts while keeping Kitz- haber's big-picture plan in play.