Restaurant owner Shalon Hastings had been without health insurance for a year when she heard about Insure Montana, a state program that subsidizes health insurance for owners and employees of small businesses.

"When this came along, I was ecstatic, because it was a scary thing to be without insurance," says Hastings, who owns Taco del Sol, a taco and burrito shop in downtown Helena. "(My old insurance) was way too expensive, and they weren't covering anything, not even preventive for dental."

With the help of Insure Montana's subsidies, Hastings says she now pays less than $500 a month for health insurance that covers herself and another full-time employee.

Hastings is one of nearly 1,600 business owners who've taken advantage of Insure Montana, an $11 million-a-year program that began 20 months ago, helping business owners finance health insurance for themselves and some of their employees.

Funded by a tobacco-tax increase approved by voters in 2004, Insure Montana has helped pay for health insurance for nearly 5,400 people who previously had none. They're now covered by group insurance bought through their employer and subsidized by the state.

Another 4,900 people are covered by health insurance purchased by other small businesses that get tax credits through Insure Montana, to help them maintain group-health plans they already had.

"The overwhelming majority of people who are covered by the program are amazed by what they're getting, and happy with it," says state Insurance Commissioner John Morrison, whose office administers and helped develop the plan.

Yet while Insure Montana is popular and in great demand -- 600 businesses are on a waiting list to buy its pooled coverage -- it still has its skeptics.

Rep. Mary Caferro, D-Helena, says she's all for helping small-business workers get access to health coverage.

But she'd rather have public funds provide the coverage directly to people most in need, such as children and low-income workers, instead of subsidize private insurance for whoever's buying it.

"Do we really want millions of dollars going to the insurance industry with (little) accountability?" she asks. "It doesn't seem like a very cost-efficient use of taxpayer money."

Those on the program, however, aren't arguing about its worth.

"It's the difference between health insurance and no health insurance at this point in time for me," says Diana Dupuis, who bought a policy to cover herself and her husband, David, through their Web-design business in Missoula.

Dupuis says they pay $550 a month for a policy that offers good benefits. Before they heard about Insure Montana through their accountant, they were looking at prices in the $800-a-month range with less coverage, she says.

Dennis Stedman, who owns The Bike Shop in Billings, was able to buy affordable insurance that covered himself and three full-time employees, who were without coverage before.

"I feel fortunate that we were able to get in it," he says. "I think it is doing precisely what it was designed to do, which is to help small business, which otherwise wouldn't be providing these benefits to employees."

Morrison also points out that one-third of the workers buying insurance through Insure Montana are earning less than 200 percent of the federal poverty level ($27,380 for a family of two and $41,300 for a family of four).

"As it turns out, we are serving low-income people," Morrison says. "These are the working poor who have the hardest time affording health insurance."

At the same time, one-third of those insured by the program earn between 200 percent and 300 percent of the poverty level, and another third earn between 300 percent and 400 percent of the poverty level. The latter income level is $62,000 to $82,600 for a family of four.

Businesses eligible for Insure Montana can buy health insurance for their employees from Blue Cross/Blue Shield of Montana, which was the only company that emerged from a bidding process last year to offer the insurance.

Businesses must have two-to-nine employees, including the owner, and workers must work at least 30 hours a week to qualify.

The 775 businesses and their employees get a lower price because they're all in one "risk pool," rather than buying insurance as individual businesses.

The cost of the policy depends on the employee's age, health history and whether he or she wants to cover family members as well. The business pays one-half of the cost of covering the employee.

Insure Montana then subsidizes the cost by paying one-half of the business's cost of covering the worker, and anywhere from 20 percent to 90 percent of the employee's overall cost. Workers with lower incomes get a higher subsidy.

However, not every small business owner is finding a savior in Insure Montana.

Jerry Kahrs, who owns an art gallery in Gardiner that employs his wife and one other person, applied for insurance through the program. But the cost for he and his wife was more than the personal insurance policy they already had.

Kahrs is 61 and his wife, Christina Jaffe-Kahrs, is 62, and she survived cancer seven years ago. Their age and her medical history simply priced them out of an affordable policy, regardless of any state subsidy, he says.

The price of the Insure Montana policy through Blue Cross would have been fine for their 25-year-old employee, but not for them, Kahrs says, revealing an inescapable fact about private health insurance: If you're older and not a great risk, you usually pay through the nose.

"We're too young for Medicare (and) the premiums go sky-high as you approach your elder years," he says. "They sure rake you over the coals. I can't even shop around."

Kahrs and his wife pay about $10,000 a year in premiums for their current policy, which has high deductibles for each of them and no coverage for dental or vision.

Morrison acknowledges that Insure Montana is not perfect. In fact, his office asked the 2007 Legislature to make changes that Morrison, a Democrat, says would have expanded the program and brought a more balanced system of pricing.

Those changes, however, were killed by the Republican-controlled House when the bill got caught up in a partisan tiff.

Still, Morrison says Insure Montana has been a great success in getting health insurance to a sector of the population without it: "The fact of the matter is that there are (5,000) people getting health care who weren't before."

Hastings, the restaurant owner in Helena, says Insure Montana not only offers affordable insurance for her, but also to her 21-year-old day manager, helping Hastings maintain a good employee in a high-turnover, competitive field.

"We are insuring someone, some way," she says. "We're saving money by helping insure some people. It was just a relief to get this in place. It's hard to provide both health insurance and good pay."