TRENTON, N.J. (AP)  -- All New Jersey children would have to have health insurance and all taxpayers would have to annually prove they have health insurance under a plan advanced Thursday by senators.

The Senate health committee released the legislation designed as the first step toward universal health coverage for all residents by 2011. It's the first time the long-discussed plan has moved ahead. It can now be considered by a Senate budget panel, then likely the full Senate.

``This is a broken and dysfunctional system, and it's time for a health care plan that works,'' said Sen. Joseph Vitale, D-Middlesex, the bill sponsor.

About 1.5 million New Jerseyans lack health insurance, according to the Henry J. Kaiser Family Foundation, or about one in six residents. Of those 1.5 million, 275,000 are children.

The measure would require all children under 18 to have insurance within a year of the law being enacted, whether through public health programs or private insurance, though it calls for no penalties for parents who fail to enroll children.

It would expand a state-run health program for the poor called NJ FamilyCare to include more parents, who presumably would also enroll their children.

Other families would be able to buy insurance coverage from the state at reduced rates.

The plan would require all New Jerseyans beginning next year to prove they have health insurance when filing income tax returns. Those who don't have insurance would be sent insurance applications.

It also proposes private insurance changes to try to make it more affordable.

Vitale said the first year's $28.8 million cost can be paid with unspent federal and state money designated for treating the poor.

Republicans question whether the state could handle the initiative, noting a recent audit found people earning as much as $295,000 enrolled in NJ FamilyCare.

``The state must learn how to prevent fraud and abuse in a limited program such as NJ FamilyCare before it tackles the much larger challenge,'' said Assemblyman Richard Merkt, R-Morris.

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