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Schwarzenegger proposes universal health plan

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SACRAMENTO, Calif.--All California residents would be required to have health insurance, while all but very small employers that do not offer coverage to their employees would have to pay a new tax and the state would subsidize premiums for the low-income insured under a universal health reform plan unveiled Monday by California Gov. Arnold Schwarzenegger.

Gov. Schwarzenegger described the plan as a model that could be used by the rest of the nation.

"We can make history," he declared.

The heart of the package is an individual mandate--similar to one enacted last year in Massachusetts--that would require all state residents to have health insurance coverage. Very low-income uninsured individuals--who would receive coverage through the state's Medicaid program--would have their premiums completely paid for by the state, while premiums for those with incomes of between 100% and 250% of the federal poverty level would be heavily subsidized.

Employers would not be required to offer or pay for employees' health insurance coverage, but employers with 10 or more employees who choose not to offer health coverage would have to contribute an amount equal to 4% of payroll towards the cost of employees' health coverage.

Revenues from that assessment, as well as revenues raised by a new assessment on hospitals equal to 4% of their revenues and an assessment on doctors equal to 2% of their revenues, would help fund coverage for the unsinsured.

Achieving universal coverage will be a boon to health care purchasers, Gov. Schwarzenegger said, noting that health insurance premiums are inflated by 10% as health care providers boost charges for insured patients to offset the cost of providing coverage to the uninsured. Nearly 20% of California residents--or about 6.5 million people--lack health insurance coverage.

"It is a huge burden to our economy," he said, adding that he is willing to discuss how to improve the package with state legislators, who would have to approve the plan.

Other state executives in the coming weeks are expected to propose reform packages to expand coverage. Last year, both Massachusetts and Vermont passed measures to significantly expand coverage.