and Jerry L. Mashaw

are professors

at Yale University

Continued gridlock in Washington over health-care reform is forcing more and more states to devise their own plans in an effort to cover the uninsured and the underinsured, and to fight increased costs.

Massachusetts recently launched an ambitious program that is being closely watched as a possible model. Similar efforts to provide universal coverage to the uninsured in California failed.

Now, along comes Pennsylvania, home to 800,000 uninsured residents. Gov. Rendell has put forward a responsible plan, and House lawmakers passed a scaled-back version March 17 that Rendell seems inclined to support.

What have Rendell and his legislative colleagues proposed where others have struggled to find a workable solution?

First, consider that there are really only two major ways to reform health insurance responsibly, and Pennsylvania has taken one of them. A state or nation can provide a single plan of financing - with set benefits, equal treatment of all its citizens, and with a pool of all its citizens taxed to finance the care - and call it, say, Medicare for all.

The second option is to provide health insurance for all by "aggregation," or patching together one by one the elements that can add up to a coherent whole. That is Rendell's strategy. House lawmakers passed a similar, though less-ambitious, version.

In almost all cases, states are attempting to create a universal approach by patchwork. That requires piecing together existing state and federal programs and employment-based insurance with new state pools and/or subsidies.

Everyone recognizes that these schemes are fiscally ambitious. But, equally obvious, the need for reform is great. And if current public and private effort can be maintained, a combination of cost controls and relatively modest new state spending has a reasonable chance of closing the widening gaps in coverage.

While this patchwork approach has obvious limitations - complexity, continuation of the high administrative costs of private insurance, and so on - it avoids the massive political obstacles to a complete overhaul of existing health-insurance arrangements.

Rendell's particular approach has much to like. Indeed, it is more serious about cost control and unified coverage than the Massachusetts program or the proposals of the presidential hopefuls.

Why? The Rendell plan includes significant regulatory limits on underwriting, administrative costs and the huge variation in insurance premiums. Insurers will not be allowed to avoid the sick, charge them exorbitant premiums for coverage or fritter away too many precious dollars (although still a lot) on advertising and other non-health-related expenditures.

Still, the governor's plan faces real challenges - even if adopted as proposed. The first is fiscal. If too many employers jettison their existing health-insurance plans to take advantage of the subsidies available for new employment-based coverage - or decide to leave their workforces to the individual market - the state could find itself with very large financial promises to keep.

The second is legal. The very regulatory provisions that we have praised may well cause the plan to violate the preemption provisions of the Employee Retirement Security Act. ERISA preemption prohibits state regulation of employer benefit plans where the firm bears financial risk and has other companies administer their health insurance.

It is enough to note that ERISA is the rock upon which most state attempts at universal coverage have foundered (and Massachusetts may yet). The only state with effective universal coverage is Hawaii. Why? Hawaii has the only statutory exemption from ERISA.

So here is the question that Pennsylvania voters might ask the presidential candidates now seeking their primary votes. If your health-reform plan at the federal level fails - as all others have - do you support repeal of ERISA preemption so that responsible state governments can do the job that the federal government apparently cannot?

Finally, the Rendell approach mixes his administration's thoughtful reform with fashionable platitudes. So, for instance, we are told that expanded coverage of preventive medicine and wellness programs will help reduce costs and that more information to patients about drugs will counteract pharmaceutical inflation.

All may be admirable, but no industrial democracy has constrained the costs of universal health insurance through such devices. Such appeals represent the persistent pursuit of panaceas. Setting panaceas aside would make Pennsylvania's reform approach more convincing.