One year ago, the passage of a universal health insurance coverage plan in Massachusetts set off a surge of interest in health care reform. This surge has now grown into a wave. Over twenty states are considering some form of universal coverage. New proposals are being touted on the campaign trail, in think tanks, and in Congress.

Despite some hitches, the implementation of the Massachusetts plan is well under way. Uninsured residents who do not qualify for a subsidized health insurance policy can begin signing up for coverage on May 1. Most state residents must show proof of coverage by July 1 or face a penalty (in the first year, they would lose the $219 personal state income tax exemption). While long-term success is far from assured, the progress in Massachusetts should keep the momentum building for universal coverage nationwide.

The Massachusetts plan, like other individual mandate proposals, faces a key dilemma: will health insurance policies with adequate coverage be offered at a price individuals can be reasonably expected to pay? Premiums either may be too high or kept artificially low because of skimpy benefits and high deductibles.

It remains to be seen whether this circle can be squared and insurers actually will offer policies with lower premiums that offer decent coverage, rather than coverage in name only. But Massachusetts has taken several giant steps in recent weeks toward getting the plan up and running in practice. Insurers in the Bay State initially weighed in with plans costing around $380 per month for a policy with a $2,000 deductible. This strained the definition of affordability under any measure and was far above expectations.

Governor Deval Patrick, who inherited the plan from former governor Mitt Romney (now running away from the plan in his presidential campaign because it might smack of big government) personally intervened with large Massachusetts insurers such as Tufts and Harvard Pilgrim to push for lower premiums. Largely as a result of Patrick’s jawboning, these opening bids were reduced to more manageable levels. Monthly premiums for a 37-year old single man in greater Boston (described by the state as the typical uninsured resident) are expected to range from $175 to $288 a month. The lowest-priced policy is being offered by a small Boston-based insurer, Neighborhood Health Plan.

In March, the Commonwealth Health Insurance Connector Authority, the board charged with overseeing and implementing the Massachusetts plan, stipulated which benefits had to be covered by all insurers. These include existing insurance products, which have until 2009 to phase in the new requirements. In April, the board recommended levels of affordable coverage based on an individual’s income (for instance, a single person earning between $35,000 and $40,000 a year would not be expected to pay more than $200 a month in premiums) and expanded subsidies for some of the state’s 550,000 uninsured.

Employers are fretting about mandates to cover prescription drugs, advocates worry that coverage will be too bare-bones, and policy types think that the subsidies may be too widely available and may undermine employer coverage. These compromises, however, seem sensibly aimed at making the program work in practice rather than remaining tied to what are probably unrealistic initial targets on cost or coverage. As James Kingsdale, the executive director of the Connector Authority, pointed out, the Massachusetts plan has done some things that are truly unprecedented, such as specifying a set of core benefits and services. If the premiums remain at the current level,they are far lower than any comparable coverage that can be purchased in the existing individual market.

The steps taken so far in Massachusetts are real milestones. Once the expectation of universal coverage becomes the norm, it will be much more difficult to roll back coverage for the formerly uninsured, as happened previously in Oregon and Tennessee . But several troublesome prospects loom. In the first year, only sicker uninsured residents are likely to enroll while others will chose to pay the modest penalty, raising the possibility that insurers will hike their rates in coming years. Employers with more than ten workers may choose to pay an annual $295 tax rather than continuing to offer coverage. If the state steps in to plug these revenue shortfalls, it may antagonize taxpayers and employers. The state may end up shoring up an unnecessarily cumbersome public-private hybrid in order to achieve coverage for all.

This raises the wider issue of the relationship between state initiatives and federal action. State initiatives have proven to be the catalyst for getting universal coverage back into the policy debate. The types of public-private hybrids being tested in the states may well become the model for a federal plan. The Wyden and Edwards universal coverage plans (as well as one proposed by this author) have many similar features.

However, the success of some state efforts is different from saying that state-by-state coverage is the likely route to health care for all. It’s an open question whether states, most of which face annual balanced budget requirements, can sustain the financing for universal coverage in the face of fluctuating revenue streams. One chief architect of the Massachusetts plan, MIT’s health policy expert Jon Gruber, has honestly referred to it as a three-year experiment. The financing, he acknowledges, will have to be revisited. Proposals could run afoul of federal ERISA laws. States may not have the power, on their own, to implement serious cost containment efforts (though Massachusetts has done the right thing by introducing pay-for-performance standards in the state’s Medicaid program, MassHealth). But the longer state plans keep making headway, the more likely it is that the federal cavalry can assemble and ride to the rescue.

Leif Wellington Haase is a Senior Program Officer and Health Care Fellow at The Century Foundation.