It isn't the spectre of 43 million people--15 percent of the U.S. population--lacking health insurance that has some of the biggest corporate guns worried about health care. It's the cost of premiums they have to pay for their workers and retirees--and the drag that puts on their bottom line. Take the Big Three automakers. They say their health insurance outlays add upwards of $780 to the cost of each vehicle they produce. That's an expense cars manufactured abroad don't bear.

Similarly, states are in a state of anxiety over the soaring cost of insurance premiums for their employees and providing health care for Medicaid recipients--and the huge drag that is on their budgets. Health care accounts for more than one out of every five dollars that states spend, putting state health expenditures on a collision course with education and other priorities.

Clearly, the financing of health insurance is on the verge of a systemwide breakdown, with the public sector not only feeling the pain directly through its own costs but indirectly through the shakiness of companies whose fiscal health is necessary to the home state's well being. The need for some kind of universal health care and the rationality that could bring to the overall financing of the system has been a hot-button issue for more than a decade. But no politically acceptable solution has emerged on the national level.

Meanwhile, states have tried or are trying to get a grip on the problem. A few years ago, Oregon extended coverage to its less- affluent citizens by "rationing" it--limiting procedures that insurance would cover in exchange for providing basic coverage for more people. That approach foundered recently on the shoals of financial shortfalls. Similarly, the flush years of the late 1990s saw many states expand their State Children's Health Insurance Programs to cover parents of children in SCHIP. Those efforts also were cut back in the face of billion-dollar state budget gaps.

This year, Maine and California started down a more direct road to universal coverage by asking businesses to step up to the plate. Maine's Dirigo Plan calls for small businesses to provide up to 60 percent of the cost of insuring their workers while the state provides subsidies for employees who can't afford their share of the premiums. California's legislature just passed a "pay or play" initiative: Employers will pay a fee to the state (to purchase insurance) for every employee they do not cover.

While these attempts to force coverage are commendable, they may turn out to be the right approach at the wrong time. A Kaiser Family Foundation survey on health insurance premiums found a rise of 13.9 percent in 2003, the third straight year of double-digit increases; for some small businesses, the premium jump was two or three times that. Those kinds of dramatic increases could make an employee-based approach untenable.

What this suggests is that employer-based insurance is an endangered species. Politically, there probably is no consensus to move to Canadian-style universal coverage. But there are some new ideas out there that states may find worth thinking about--or even agitating for.

One is a voucher system. Writing in a New York Times opinion piece in November, Ezekiel Emanuel, an oncologist and bioethicist, and Victor Fuchs, a professor emeritus of economics at Stanford University, proposed giving every U.S. resident a voucher to purchase health insurance that covers basic care--such as doctor visits and prescription drugs--and catastrophic care. Anyone who wanted more services would pay a premium beyond the basic voucher. They see this approach, which would phase out both Medicaid and Medicare, as offering something appealing to Democrats (universal health care), Republicans (demise of Medicaid and Medicare), businesses (no more insurance premiums) and citizens (guaranteed coverage with choice). For states, the advantages are obvious.

Another idea is being floated by Henry Aaron, a senior fellow at Brookings, and Stuart Butler, vice president of the Heritage Foundation. The two are at opposite ends of the political spectrum-- Aaron is liberal; Butler conservative--but they have found a way to come together on an initiative designed to support states in launching a variety of localized programs. The federal government would offer financial incentives and rewards to states that agree to test various strategies to extend health insurance, such as single-payer plans, employer mandates, mandatory individual purchase of privately offered insurance, tax credits and other "creative new approaches." In so doing, the states "will aid the policy discovery process" and "reveal problems with particular plans unanticipated by their advocates."

These ideas aren't as radical--or as fraught with pre-existing partisan positions--as a Canadian-style solution. The opportunity exists for states to capitalize on private- and public-sector miseries and form alliances to find a universal solution.