It’s been fifteen years since Republicans rode the “HillaryCare” debacle to majority status in Congress. For all its rightful criticism of a big government solution to the dysfunctional health care market, the party has subsequently failed to achieve anything resembling the consumer-driven revolution that has been its rallying cry.

Meanwhile, the number of Americans without health care coverage had risen to 45.7 million as of the latest Census Bureau survey in 2007. If, as estimated by the Kaiser Family Foundation, a 1% increase in unemployment can be expected to result in 1.1 million additional uninsured, that figure could soon be 50 million.

Perhaps more ominously for those who faced down the Clinton proposal, the cost to business of providing insurance has grown substantially—while the competitive pressures from a globalized economy have decreased profit margins. Faced with ever-increasing premiums, but wanting to do the right thing (morally and competitively) by maintaining coverage, employers have passed along the increased cost. Thus, while overall compensation in the mid-2000’s reflected the strong growth of the economy, median wages remained stagnant. The recent financial crisis will only make the choice between providing insurance and maintaining wage growth—not to mention jobs—that much starker for American corporations.

These concerns should rule out Republican intransigence on health care reform. But what’s the alternative?

At the risk of causing conservative heads everywhere to explode, I’d suggest looking to Massachusetts. The market-based plan implemented in 2006 under the leadership of then-Governor Mitt Romney acknowledged some of the uncomfortable truths of the current health care landscape. Among these is the fact that, if we are to avoid the kind of government-run monopoly that Republicans fear, government must play a role in helping lower-income families to purchase privately-offered insurance (Disclosure: I served for four years as director of state-federal relations for Governor Romney).

The Romney plan freed insurers to offer slimmed-down plans without some of the previously required benefits—decreasing the average cost of premiums significantly. And the so-called individual mandate under which all citizens must maintain insurance coverage put the state on a path toward eliminating health care free-riding by diverting money that had previously been used to cover hospitals’ unpaid bills toward premium subsidies. This provision also brought tens of thousands of (mostly young) healthy individuals into the market. Many of these “invincibles,” as they are nicknamed by insurers, had made the economically rational decision to forego even basic insurance because of its prohibitive cost. In the unlikely event they needed care, they could seek it knowing that many hospitals were lax in collecting from the uninsured—in part because of state reimbursement for these costs. This actuarially attractive population has attracted fierce competition among insurance companies, further driving down premiums.

The lynchpin of the private market reforms in Massachusetts was creation of the “Health Connector.” Individuals purchasing policies through this public entity are able to use pre-tax dollars to pay premiums. Their coverage is also portable. This is a crucial step toward severing the link between the workplace and health care—a link that developed as a historical anomaly during World War II and has subsequently distorted job mobility and productivity, not to mention being a huge drag on the ability of American corporations to compete with foreign entities whose employees receive health care via national, single-payer systems.

Romney set three overarching goals, each of which applies meaningfully to the national debate and could be embraced by conservatives. The first was to eventually ensure that all citizens of Massachusetts have access to affordable, quality healthcare. The second was that the initiative be funded by reprogramming existing health care dollars and by having all but the poorest of those receiving premium assistance from the state make some contribution towards their insurance. Finally, he wanted to strengthen, or at least do no harm to, the employer-based private insurance system. Since the plan was implemented in June of 2006, the Commonwealth has seen progress toward each of these goals.

On the coverage front, Massachusetts has made astounding gains. In the first 27 months since implementation, the number of residents with health insurance rose by 432,000—a leap of almost nine percent. The largest share (43 percent) of those acquiring coverage purchased private insurance on their own. Another 39 percent received subsidies toward their premiums, while 18 percent were added to the Medicaid rolls. At 2.6 percent, Massachusetts now has the lowest rate of uninsured in the nation.

In order to make the numbers work without increasing taxes, Romney negotiated a complicated scheme that would see the money that hospitals received for treating those without insurance (the “free care pool” as it was inaccurately labeled) gradually transferred toward the premium support fund. This had two important advantages over the status quo.

Bringing the previously uninsured into the system would allow the coordination of their care, including cost-effective preventive measures and location-appropriate treatment. It would also begin to wean hospitals from the concept of a guaranteed source of revenue to cover the cost of treating the uninsured. Instead, they would have strong incentives, in terms of patient outcomes and institutional budgeting, to direct individuals into one of several venues for gaining (mostly private) coverage. Payments to hospitals for free care have declined by 40 percent since the reform’s implementation.

As mentioned above, Massachusetts has achieved this progress while significantly expanding private coverage, defying the predictions of many conservative critics. In fact, while national rates of employer-offered insurance dropped by 12 percent this decade, the state saw a slight uptick. Even the notoriously unattractive non-group market experienced a nearly two-fold increase in participation under the plan.

That’s not to say the plan was perfect, or that it has been perfectly implemented. It is important to remember that Romney had to get his bill through a legislature in which Democrats outnumbered Republicans 7 to 1. Several of the strongest cost-control measures that the Governor had proposed were stripped out of the bill that landed on his desk.

The final version did not go nearly far enough in waiving coverage mandates, for example, nor was it as strict in enforcing the phase out of free care payments to hospitals and community health centers as it should have been. Romney’s successor, Democrat Deval Patrick, has had to quietly trim those payments as he sought to bridge the gap between projected and actual costs. Democrats also expanded eligibility for Medicaid and overrode the Governor’s veto of this costly provision.

The Commonwealth had anticipated enrollment in the subsidized insurance program to be 225,000 in fiscal year 2009. In fact, the enrollment will likely top 250,000. Some opponents charge that this is the obvious byproduct of subsidizing care—increased demand. However, given that the amount and percentage of individuals purchasing privately-funded care has grown even faster, it is most likely an indication that the estimates of the uninsured population in 2006 were lower than the actual amount. Regardless of how you interpret the overruns, the cost per person covered and the average premium for state-subsidized plans are both lower than projected at the bill’s passage, a sign that expanding the number of private purchasers is working in the way free market advocates would predict.

Romney took pains in his 2008 presidential campaign to make clear that what worked in Massachusetts may not translate directly to other states or the nation as a whole. And the danger that even the most market-friendly reforms can be turned into government giveaways is real. But, based on the fundamentally conservative principles behind the reform, and its encouraging results thus far, Republicans wishing to be constructively engaged in the national health care debate could do much worse than to glean some policy inspiration from the Bay State.

Frank Micciche is the Managing Director of the Next Social Contract Initiative at the New America Foundation.