California Governor Arnold Schwarzenegger wants to require all Californians to have health insurance, including 6.5 million state residents who are currently uninsured.
Under the governor's plan announced Monday, businesses with 10 or more employees would be required to offer health insurance or pay into a state fund.
The fund would also be subsidized by payments from doctors and hospitals. The state would then subsidize insurance for poor people. The plan would require everyone living in California - including illegal immigrants - to have health insurance.
Governor Schwarzenegger said his plan would save $10 billion a year in hidden costs in the treatment of the uninsured, who cannot lawfully be turned away from hospital emergency rooms.
The proposal, which still requires approval from the California state legislature, mirrors a universal health care plan passed last year in the northeastern state of Massachusetts.
California has the largest population of any U.S. state.
Some information for this report was provided by AP and Reuters.