PORTLAND — Once, Oregon was a vanguard state for health care reform — widely admired for its Oregon Health Plan, which at its peak offered coverage to 125,000 of the state’s working poor.

Then came the recession and subsequent cutbacks in the health plan to just 20,000 people, as well as voter rejection of a plan to offer coverage to every uninsured child in the state.

Meanwhile, Oregon’s position was leapfrogged by other states, most notably Massachusetts, which got national attention for its up-and-running experiment with universal health care coverage.

Now, a hand-picked group of Oregonians are working on a plan to reclaim the state’s health care reform status. Its goal is to present an ambitious universal health care mandate, and a way to pay for it, to the legislature in 2009.

Their task grew more complicated when voters this month defeated Measure 50, the program that would have extended coverage to Oregon’s uninsured children.

“We had a huge task to start with. Now there are 116,000 children that we need to add to the equation,” said Dr. Charles Hofmann, a physician and former mayor of Baker City who is serving on the Oregon Health Fund Board, a group created and funded by the 2007 legislature.

The goal is to figure out a way to cover the 576,000 Oregonians without insurance, and to control skyrocketing health care costs for everyone else.

Discussions are still preliminary. But key centerpieces of a likely plan are taking shape, including a major expansion of the existing Oregon Health Plan, and a “health exchange,” allowing self-employed individuals and small businesses a forum to purchase health coverage.

The idea is to pool their collective purchasing power, making it easier to track down a cost-effective insurance plan. The menu of choices would be negotiated over and maintained by an independent board. Individuals who change jobs would be able to maintain their health care.

The proposal is less dramatic than doing away with employer provided health care, a key part of a proposal that’s being pushed by U.S. Sen. Ron Wyden, D-Ore., and has attracted bipartisan support in the Senate. But the lack of such sweeping change is intended to help sell the program to the wider public, about 80 percent of whom have health care coverage, mainly through their employer.

Like Massachusetts, Oregon’s new plan also could require the state’s residents to have health insurance, much the same way that all drivers are required to purchase auto insurance. Those who choose not to purchase health care could be penalized, perhaps by forfeiting their tax rebate “kicker” checks.

Besides expanded access to the Oregon Health Plan for the state’s poorest families, people who make up to $62,000 per year in a family of four could be eligible to get reduced premiums for their care if they join the state program.

There’s also talk about how to make the existing system more efficient, said Barney Speight, director of the Health Fund Board. That includes more emphasis on preventative care and rewards for doctors who are able to help patients with chronic diseases manage their conditions, thereby reducing expensive emergency visits.

The question, of course, is how to pay for it all.

The Oregon Health Policy Commission has estimated that putting such a system in place would cost $550 million a year, a significant chunk of the $15.8 billion that’s projected to be in the state budget for the 2009-2011 fiscal cycle.

One possibility is a payroll tax, though whether employers and employees would both pay the tax is an open question. It’s also unclear whether employers that provide their own private health insurance plans would be allowed to opt out, or pay a discounted rate.

The health fund board could also eye a series of more unorthodox revenue streams, like a “medical luxury tax,” charged to those who undergo expensive cosmetic surgery procedures, or a “health transaction tax,” similar to one in place in Minnesota, that would impose a surcharge on visits to doctors or hospitals.

But given the historical distaste of Oregon voters for any sort of new taxes, or expanded government programs, legislators will likely punt a decision on any funding mechanism to voters.

“Any proposal that the board makes to the 2009 legislature regarding a strategy for raising revenue, everyone expects that it will be a referendum,” Speight said. “I am politically realistic enough to know that if the legislature were to pass something without a referendum, there would probably be an initiative to put it on the ballot.”

In order for a payroll tax or something like it to pass muster on the ballot, Speight said, advocates will have to make sure they get everyone — particularly business groups — on their side, to fend off any expensive political campaign against the proposal.