By Ros Krasny

BOSTON, July 31 (Reuters) - Massachusetts lawmakers on Tuesday are expected to vote on a sweeping bill aimed at containing the growth of healthcare costs and supporting the state's 2006 health reforms, which became a national blueprint.

The 350-page bill, which has broad support from businesses and the healthcare industry, is being debated on the final day of the legislature's formal session, and if passed would go to Governor Deval Patrick for approval.

If passed, Massachusetts would become the first state to try to limit how much providers and insurers can spend on medical care, furthering the state's long history of healthcare innovation.

Central to the bill is a plan to save up to $200 billion over 15 years by pegging the increase in healthcare costs to no more than the rate of growth in the state's economy.

The bill also pushes the creation of "accountable care organizations" designed to provide coordinated medical care for patients in place of the traditional piecemeal approach.

"By paying for quality, not quantity, our state's healthcare delivery system will be better and more cost-effective," said Amy Whitcomb Slemmer, executive director of the advocacy group Health Care for All.

Healthcare spending would be capped at a growth rate no faster than the state economy through 2017, and in the following five years would be constrained further, to half a percentage point below the growth of the state economy.

Massachusetts has been growing at about 3.7 percent in recent years, faster than the United States as a whole. Until recently, medical spending in the state was rising at almost twice that rate.

Patrick, a Democrat, proposed some of the elements in the bill in early 2011 as a way to urgently address spiraling costs faced by state residents and businesses.

Massachusetts achieved near universal health insurance coverage as a result of its 2006 reforms, spearheaded by then-Governor Mitt Romney, now the Republican presidential candidate, and the state's Democratic-controlled legislature.

The 2006 law features a mandate for most residents to either provide proof of insurance or pay a penalty, and was closely mirrored by President Barack Obama's national healthcare legislation.

Architects of the original Massachusetts law acknowledge that cost controls were not a major part of original debate, as the state concentrated first on expanding coverage.

Even so, Massachusetts healthcare premium growth has slowed recently, helped in part by new agreements between insurers and providers that have started to move away from the fee-for-service model.

Other provisions of the current bill include an additional allocation for public health programs, community-based prevention and wellness efforts aimed at preventable chronic diseases, and reforms to medical malpractice laws.

The legislation earned the backing of the Greater Boston Chamber of Commerce.

"It sets a goal for healthcare costs that builds on the progress we've made ... while preserving the innovation that drives our healthcare system," said Jim Klocke, the Chamber's executive vice president.

Associated Industries of Massachusetts, an employer group, said the bill was a first step toward "slowing the runaway health insurance premiums that have impeded job creation and economic growth for a decade."

The group had pushed for a more aggressive cost-control target and greater efforts to root out wasteful spending.

"Controlling the cost of healthcare and health insurance remains the single most important issue for Massachusetts employers," said Kristen Lepore, vice president of government affairs at AIM.

Amid the enthusiasm, the non-partisan Pioneer Institute said the bill was flawed, at best, and would leave the healthcare system burdened with more bureaucracy and costs.

"The legislation rehashes failed top-down strategies of the past, putting government in the position of mandating outcomes rather than creating incentives for individuals," said Joshua Archambault, Pioneer's healthcare policy analyst.

The strategies for pegging the growth of healthcare costs to the state's economic growth were unproven, he added.

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  • 1912

    Former President Theodore Roosevelt champions national health insurance as he unsuccessfully tries to ride his progressive Bull Moose Party back to the White House. (Photo by Topical Press Agency/Getty Images)

  • 1935

    President Franklin D. Roosevelt favors creating national health insurance amid the Great Depression but decides to push for Social Security first. (Photo by Keystone/Getty Images)

  • 1942

    Roosevelt establishes wage and price controls during World War II. Businesses can't attract workers with higher pay so they compete through added benefits, including health insurance, which grows into a workplace perk. (Photo by Hulton Archive/Getty Images)

  • 1945

    President Harry Truman calls on Congress to create a national insurance program for those who pay voluntary fees. The American Medical Association denounces the idea as "socialized medicine" and it goes nowhere. (Photo by Keystone/Getty Images)

  • 1960

    John F. Kennedy makes health care a major campaign issue but as president can't get a plan for the elderly through Congress. (Photo by Keystone/Getty Images)

  • 1965

    President Lyndon B. Johnson's legendary arm-twisting and a Congress dominated by his fellow Democrats lead to creation of two landmark government health programs: Medicare for the elderly and Medicaid for the poor. (AFP/AFP/Getty Images)

  • 1974

    President Richard Nixon wants to require employers to cover their workers and create federal subsidies to help everyone else buy private insurance. The Watergate scandal intervenes. (Photo by Keystone/Getty Images)

  • 1976

    President Jimmy Carter pushes a mandatory national health plan, but economic recession helps push it aside. (Photo by Central Press/Getty Images)

  • 1986

    President Ronald Reagan signs COBRA, a requirement that employers let former workers stay on the company health plan for 18 months after leaving a job, with workers bearing the cost. (MIKE SARGENT/AFP/Getty Images)

  • 1988

    Congress expands Medicare by adding a prescription drug benefit and catastrophic care coverage. It doesn't last long. Barraged by protests from older Americans upset about paying a tax to finance the additional coverage, Congress repeals the law the next year. (TIM SLOAN/AFP/Getty Images)

  • 1993

    President Bill Clinton puts first lady Hillary Rodham Clinton in charge of developing what becomes a 1,300-page plan for universal coverage. It requires businesses to cover their workers and mandates that everyone have health insurance. The plan meets Republican opposition, divides Democrats and comes under a firestorm of lobbying from businesses and the health care industry. It dies in the Senate. (PAUL J. RICHARDS/AFP/Getty Images)

  • 1997

    Clinton signs bipartisan legislation creating a state-federal program to provide coverage for millions of children in families of modest means whose incomes are too high to qualify for Medicaid. (JAMAL A. WILSON/AFP/Getty Images)

  • 2003

    President George W. Bush persuades Congress to add prescription drug coverage to Medicare in a major expansion of the program for older people. (STEPHEN JAFFE/AFP/Getty Images)

  • 2008

    Hillary Rodham Clinton promotes a sweeping health care plan in her bid for the Democratic presidential nomination. She loses to Obama, who has a less comprehensive plan. (PAUL RICHARDS/AFP/Getty Images)

  • 2009

    President Barack Obama and the Democratic-controlled Congress spend an intense year ironing out legislation to require most companies to cover their workers; mandate that everyone have coverage or pay a fine; require insurance companies to accept all comers, regardless of any pre-existing conditions; and assist people who can't afford insurance. (Alex Wong/Getty Images)

  • 2010

    With no Republican support, Congress passes the measure, designed to extend health care coverage to more than 30 million uninsured people. Republican opponents scorned the law as "Obamacare." (Mark Wilson/Getty Images)

  • 2012

    On a campaign tour in the Midwest, Obama himself embraces the term "Obamacare" and says the law shows "I do care." (BRENDAN SMIALOWSKI/AFP/Getty Images)