Massachusetts' pioneering health care system, which requires nearly everyone to carry insurance or face fines, is about to be put to the test by this bad economy.

Unemployment in the state has climbed over the past three years from around 4.8 percent to close to 7 percent, meaning 72,000 more people are out of work now than when the law was signed in 2006. Many of the newly jobless may have to buy their own insurance.

Will they do it? Will the state penalize those who don't? And will this recession-battered state be able to bear the added costs of supporting the program?

With the Obama administration hoping to expand health care nationally, the fate of Massachusetts' program is being watched closely.

"People are going to be watching how it fares in the recession and how resilient it is and whether people will continue to be able to afford health care when they face other economic pressures," said Drew Altman, president of the Kaiser Family Foundation, a health policy think tank.

Officials said they are confident those who have lost their jobs will do the right thing and obtain insurance. The law guarantees virtually free insurance for the poorest of the poor, creates subsidized plans for those making up to three times the poverty level, and offers lower-cost private coverage for those earning more.

"The fact that Massachusetts has so many options for people to obtain and maintain health care is a great comfort," said Leslie Kirwan, head of the Health Care Connector Authority Board, which oversees the law.

For example, a family of four earning $42,400 in the Boston area could get a subsidized health care plan for a premium of $39 a month. A Boston family of four who earn too much to qualify for a subsidy can get a basic private plan for about $766 a month.

Also, for some people who have lost their jobs, the state covers nearly the entire cost of maintaining their insurance as long as they are collecting unemployment, which lasts up to 46 weeks in Massachusetts.

People who fail to obtain insurance can be hit with fines that could top $1,000 for an individual during the 2009 tax year. The fine is deducted from the individual's tax refund. If the refund isn't enough to cover the fine, the state bills the taxpayer for the balance.

About 60,000 people had to pay a penalty for not having insurance in tax year 2007, according to the state Revenue Department. The penalty for that year was $219 for an individual, $338 for the head of a household. But the penalty was waived for tens of thousands of other taxpayers.

"We said from the outset that we are looking to insure people, not penalize them, and the general and flexible process has reflected that philosophy," said Richard Powers, a spokesman for the Connector.

A report by the Revenue Department in December found that in 2007 only 1.4 percent of tax filers required to have insurance failed to have it.

In this economy, the state is getting ready for an increase in the number of people relying on subsidized plans.

The current budget projected spending of $820 million to cover 164,000 people in subsidized plans. Democratic Gov. Deval Patrick's proposed budget for the fiscal year that starts on July 1 would increase spending to $880 million to cover up to 180,000.

The governor and the top two leaders in the Legislature have said they are committed to maintaining the program, despite the need for billions in spending cuts in other programs to bring this year's budget and next year's into balance.

But others in Massachusetts say it is time to rethink the mandate, given the rising number of unemployed.

"We need to take a breath and remodel the system for a set of economic circumstances that weren't foreseen when we were doing health care reform in the first place," said House Republican leader Brad Jones, adding that the state may need to offer a waiver for those who have lost their jobs.

Rick Conroy lost his job as a general manager for a heavy construction company and hasn't bothered to obtain new insurance. Conroy conceded he probably would have been eligible for aid from the state, but decided to pass because he is healthy, his children are grown and he opposes the idea of being forced to have insurance.

"I am out of work. They are going to penalize me even more?" said the 50-year-old Bridgewater resident. "That is absurd, but that is Massachusetts."

On the Net:

Massachusetts Division of Unemployment Assistance: http://www.mass.gov/dua

Massachusetts Health Care Connector: http://www.mahealthconnector.org

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