California Governor Arnold Schwar-zenegger proposed extending health coverage to California's 6.5 million uninsured residents, promising to spread the cost among businesses, individuals, hospitals, insurers and the government.
Schwarzenegger said his plan will save US$10 billion a year by cutting costs and redirecting money already in the health care system.
"My solution is that everyone in California must have health insurance," the governor said. "If you can't afford it, the state will help you buy it. But you must be insured. That is number one."
The US is among few developed countries without some form of federal universal health coverage. Early in the administration of President George W. Bush's predecessor, Bill Clinton, the administration recommended an elaborate plan for universal health coverage. Pilloried by huge amounts of advertising, much of it sponsored by the insurance industry, the plan went nowhere.
Under Schwarzenegger's state plan, all Californians would be required to have insurance, although plans for the poorest people would be subsidized. Businesses with 10 or more employees would have to offer insurance to workers or pay 4 percent of their payroll into a state fund. Smaller businesses, which the governor's office said make up 80 percent of California businesses, would be exempt.
Insurers will no longer be allowed to deny coverage to people because of their medical problems. And all children, regardless of immigration status, will be covered through an expansion of the state and federal Healthy Families program.
Last year, Massachusetts became the first state to require universal health insurance. Massachusetts companies must offer insurance to employees or pay into a state pool.
"This plan one-ups Massachusetts," said Peter Harbage, a health care consultant with the New America Foundation, a nonpartisan think tank.
"The governor has gone further and added doctors, hospitals and health plans" to those who must help pay, he said.
California would subsidize insurance for the estimated 1.2 million poor people who do not currently qualify for state health coverage. They would be able to buy insurance through a state-run pool and would have to make a small contribution toward their premiums. Californians who go uninsured will be subject to tax penalties.
The governor said savings created by his plan would offset new fees he is asking doctors and hospitals to pay -- 4 percent of revenue for hospitals and 2 percent for doctors.
The state also would increase what it pays doctors and hospitals through Medi-Cal, the state insurance plan for the poor.
Insurers, seeing the possibility of 4 million to 5 million new customers, praised the proposal, despite the new restrictions it places on them, such as limiting administrative costs.
But employers and doctors said they were being taxed to fund the plan, while unions protested that low-income workers would bear the brunt of the costs because they will be forced to buy insurance.
Fellow Republicans also reacted negatively.
"Imposing a new jobs tax on employers of any size and expanding costly government mandates is the wrong approach," Assembly Republican leader Mike Villines said in a statement.
Allan Zaremberg, executive officer of the California Chamber of Commerce, questioned whether businesses would be asked to pay more in the future as premiums rise.
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